Low Grow Model The low grow model is viewed as an alternative to the neoclassical growth models and an advanced form of the post-growth economy. The central
concern of the representatives of this model is the use of modern methods of
mainstream economics. A leading representative of the low grow model is the
Canadian economist Peter Victor.
In a respected publication, Victor and Rosenbluth cite three reasons why governments of economically advanced states should consider alternatives to the existing
growth model (2007):
• Scarcity of resources.
• Increasing growth in developed countries leads to decreasing social prosperity.
• Growth is not required to achieve political targets like full employment and the
reduction on poverty in the Western industrialized countries.
Victor sets himself apart from many opponents of growth or advocates of
shrinking growth by criticizing them for reaching conclusions without considering
or using the empirical methods of modern economics. He claims they cannot
sufficiently show and justify what happens to an economy without growth or with
shrinking growth. Instead, they confine themselves to qualitative statements in order
to illustrate or substantiate their own arguments.
The approach preferred by Victor is based on a computerized model of the
Canadian economy. He analyzes the effects of different growth scenarios on selected
macroeconomic indicators. His original simulation model includes variables such as
consumption, public spending, investment, employment, trade, and production.
Based on statistical data for the Canadian economy, he developed three scenarios
for the period 2005–2035. His forecasts show how various indicators such as the
unemployment rate, poverty rate, per capita gross domestic product, debt ratio, and
greenhouse gas emissions evolve in relation to the level of economic growth. The
three scenarios are briefly introduced below (Victor 2008):
Scenario 1 (Business as Usual) The assumption in this scenario is that gross
domestic product will continue to develop as it has over the past 25 years. Another
assumption is that there will be no significant change in economic policy. Assuming
annual growth of 2.5%, social problems such as the unemployment rate would
remain at about the same level. In contrast, poverty and public debt would increase,
and greenhouse gas emissions would increase by 80%.
Scenario 2 (No and Low Growth) What differentiates the second scenario is the
slowdown in and finally comes to a standstill. The assumption here is that there are
no compensatory economic policy measures to enact. The macroeconomic effects in
this scenario would be devastating: Per capita gross domestic product would eventually stagnate after a downturn, and poverty, unemployment, and debt would rise
sharply. This would lead to social unrest that contributes to political instability.
Victor refers to this state as the “no grow disaster.”
Scenario 3 (Low Growth) Scenario 3 demonstrates that social prosperity can be
achieved without growth. The scenario requires the per capita gross domestic
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
11
concern of the representatives of this model is the use of modern methods of
mainstream economics. A leading representative of the low grow model is the
Canadian economist Peter Victor.
In a respected publication, Victor and Rosenbluth cite three reasons why governments of economically advanced states should consider alternatives to the existing
growth model (2007):
• Scarcity of resources.
• Increasing growth in developed countries leads to decreasing social prosperity.
• Growth is not required to achieve political targets like full employment and the
reduction on poverty in the Western industrialized countries.
Victor sets himself apart from many opponents of growth or advocates of
shrinking growth by criticizing them for reaching conclusions without considering
or using the empirical methods of modern economics. He claims they cannot
sufficiently show and justify what happens to an economy without growth or with
shrinking growth. Instead, they confine themselves to qualitative statements in order
to illustrate or substantiate their own arguments.
The approach preferred by Victor is based on a computerized model of the
Canadian economy. He analyzes the effects of different growth scenarios on selected
macroeconomic indicators. His original simulation model includes variables such as
consumption, public spending, investment, employment, trade, and production.
Based on statistical data for the Canadian economy, he developed three scenarios
for the period 2005–2035. His forecasts show how various indicators such as the
unemployment rate, poverty rate, per capita gross domestic product, debt ratio, and
greenhouse gas emissions evolve in relation to the level of economic growth. The
three scenarios are briefly introduced below (Victor 2008):
Scenario 1 (Business as Usual) The assumption in this scenario is that gross
domestic product will continue to develop as it has over the past 25 years. Another
assumption is that there will be no significant change in economic policy. Assuming
annual growth of 2.5%, social problems such as the unemployment rate would
remain at about the same level. In contrast, poverty and public debt would increase,
and greenhouse gas emissions would increase by 80%.
Scenario 2 (No and Low Growth) What differentiates the second scenario is the
slowdown in and finally comes to a standstill. The assumption here is that there are
no compensatory economic policy measures to enact. The macroeconomic effects in
this scenario would be devastating: Per capita gross domestic product would eventually stagnate after a downturn, and poverty, unemployment, and debt would rise
sharply. This would lead to social unrest that contributes to political instability.
Victor refers to this state as the “no grow disaster.”
Scenario 3 (Low Growth) Scenario 3 demonstrates that social prosperity can be
achieved without growth. The scenario requires the per capita gross domestic
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
11