March 2020: Consumer driven ‘de-growth’ may incentivise large scale shifts in social values and production or consumption patterns. These shifts could lead to less resource intense and localised production patterns or integrating services into core business such as repair services. If economies were to embrace zero or negative GDP growth, it could potentially offer competitive advantage for businesses that are able to adapt.
Information
Increasing evidence points towards GDP as an inadequate measure for socio-economic successes, including in developed nations. For example, the US has experienced a six-fold increase in GDP since the 1930, however, in parallel it has recorded a sharp rise in inequality, mortality rates, and political polarisation. This evidence highlights the shortcoming of pursuing GDP growth as a means to foster higher levels of wellbeing in developed nations, and has given rise to experts questioning growth as a social or economic priority. Instead, there are arguments emerging for consumer driven ‘de-growth’ as a potential socio-economic development strategy. The concept encompasses active transformation of consumption, such as consuming less and better. This would require substantial value shifts for consumers towards consciousness of the potentially negative consequences of consumerism alongside an active desire to change consumer habits.
Implications and opportunities
Consumer driven de-growth calls for economies to embrace zero or negative growth and for businesses to shift from mass-market production to localised production and consumption. For example, businesses could focus on introducing services that are less resource intensive than the products that they displace. In this regard, social media movements (e.g. flygskam and tagskryt) aim to raise consumer awareness and shift consumer preferences which can lead to market shifts and create new opportunities for businesses. For example, consumer demand to reduce flying has bolstered train travel and a desire to reduce meat consumption has stimulated the market for meat substitutes. Such re-shuffling of competitive dynamics within and across industries offers new bases for competitive advantage for companies that begin their transition early and embrace long-term adaptation strategies. Such transition strategies could include adapted product design, repositioning of value chains, and de-growth oriented standard setting.
Limitations
The authors acknowledge that any re-allocation of economic activity will need to consider distributional differences and conflicts within and between countries, particularly between developing and developed nations. It stands as caution of social tensions arising from challenges to satisfy growing needs for employment, in particular, when there is little or no economic growth in developing nations. In addition, many economists call for decoupling resource consumption from growth and to prioritise ‘green growth’ instead of ‘degrowth’ as socio-economic development strategy.
Sources
Roulet, T., Bothello, J., (2020). Why ‘de-growth’ shouldn’t scare businesses. Retrieved from https://hbr.org/2020/02/why-de-growth-shouldnt-scare-businesses
Cassidy, J., (2020). Can we have prosperity without growth? Retrieved from https://www.newyorker.com/magazine/2020/02/10/can-we-have-prosperity-wit...
