The Rise and Fall of Degrowth
Degrowth has sparked the imagination as a radical alternative to capitalism, but can it actually work in business? While it offers a clear critique of endless growth, it seems to fail in providing companies with a real pathway forward. With a challenging narrative, a policy-driven orientation, and an inability to overcome systemic barriers, is it any wonder that degrowth struggles as a business model?
In February 2024, Martin Reeves, the Chairman of the BCG Henderson Institute hosted Kohei Saito, the author of Slow Down: The Degrowth Manifesto, on his podcast Thinkers & Ideas. Saito was notably different from the typical guests Reeves features on the podcast, who tend to be more mainstream business scholars and authors.
Toward the end of the interview, Reeves asked Saito, “What could a business leader take away from your arguments or gain by contemplating your arguments?” Saito’s response was: “I think many business leaders should ask themselves whether they are becoming happier as they become richer.” He was making the point that more money can make you happier to a certain point, and beyond that, the impact is insignificant.
While his argument has merit, it also highlights a significant gap between philosophical critiques of capitalism, like degrowth, and the practical realities of the business world. Saito’s argument assumes that happiness is a meaningful factor in decision-making, yet for many in the business world, considerations of happiness are far removed from their economic and strategic priorities.
Another interesting example for this gap also came up when, in response to Saito’s argument that we need systemic change to effectively address climate change, extreme inequality, and other pressing global challenges, Reeves commented: “That will be quite a shocking idea to many business people.” It reminded me of the finding in a 2024 PwC survey that almost half of CEOs worldwide, for example, believe they’ll need to reinvent their business to stay viable over the next 10 years. With such a need for change, one may think that it would allow for more openness to systemic change, but Reeves is right — these CEOs are probably still thinking in terms of changes within the system (i.e., reinventing their business models) rather than changing the system.
These gaps haven’t gotten any smaller since the last time I wrote about degrowth business models back in August 2022. At the time, I suggested that the biggest sustainability challenge we face is creating successful degrowth business models. Two and a half years later, I still see sustainability in business struggling to make a real difference. I believe we need systemic change to move the needle on sustainability and climate action, but I don’t think degrowth is a viable path to make it happen.
If anything, the last two and a half years have shown me that while degrowth is accurate in pointing out the weaknesses of the current system, it continues to fail at offering existing businesses and entrepreneurs a viable playbook for building, designing, and scaling degrowth-oriented alternatives.
Thinking about degrowth in terms of “a planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being” (Jason Hickel’s definition of degrowth) hints at why this is a challenging concept for business. Adding to it Schmelzer et al.’s framing of degrowth as “a proposal for a radical reorganization of society that leads to a drastic reduction in the use of energy and resources and that is deemed necessary, desirable, and possible,” you may see the challenge of translating this premise into the world of business.
This challenge for businesses, in my opinion, is driven by three key elements — dealing with a policy-driven agenda in a business context, confronting an undesirable narrative, and attempting to counter the very system they operate within.
Challenge #1: Dealing with a policy-driven agenda in a business context
Businesses a have hard time translating an agenda that is more policy-driven into the world and language of business. To some extent, I find it not too different from the difficulties businesses have with translating SDGs into the language of business. As I pointed out in this article, “SDGs are not truly business-oriented in nature, which makes it even more difficult to use them meaningfully but easier to use them for SDG-washing.”
The point is that just like SDGs weren’t made for and with business in mind, the same applies to degrowth — only much more so. It is first and foremost a policy platform, not a business platform. When Hickel and others talk about ideas such as “scaling down destructive sectors such as fossil fuels, mass-produced meat and dairy, fast fashion, advertising, cars and aviation, including private jets” or ending planned obsolescence, they envision a top-down regulatory approach driving these changes, hopefully with public support and pressure behind it. It is more likely that they see businesses as following new rules of the game, rather than shaping them.
And still, is there a role for businesses in this roadmap? That remains unclear. Yes, companies can play a role of policy-first movers — they can help push forward new policies by role modeling them, helping to normalize these policies and create a more favorable environment for policymakers working to advance this agenda on a national level. At the same time, what incentive does Danone have to stop selling dairy products, Unilever to stop advertising, or Apple to stop engaging with planned obsolescence as long as the cost of change is greater than the cost of continuing with these strategies?
Degrowth, like SDGs, may offer companies a moral North Star (e.g., anti-consumerism, a simpler life, local food), but not a strategic action plan. It offers them very little clarity and guidance on how to prepare for a post-growth era and why they should engage with this radical agenda in the first place. We shouldn’t forget that this is not done in a vacuum — other frameworks, such as net-zero goals and climate transition plans, offer businesses a much more comfortable and feasible way to engage with key societal and environmental problems.
Challenge #2: The narrative
“…degrowth or less consumption is such a hard sell with people, Like climate change is a big problem, but getting people to buy less that’s a really big problem.” (Kira Bindrim, former Editor of Bloomberg Greener Living)
Let’s be honest: Degrowth has a narrative problem. While a growing number of people are not happy, to say the least, with the current economic system, degrowth hasn’t been able to build on it and establish itself as an appealing alternative. Most people in the Global North don’t see (yet?) how downscaling of production and consumption could benefit their lives.
And it’s not like the degrowth is not trying to make the case on why it is a better alternative for people. Proponents like Hickel and Saito emphasize the concept of radical abundance, portraying the shift to a degrowth-based system as a positive transformation — one with significant upside, even for people in the Global North.. As Saito explains, “It’s a very different kind of abundance where we share things, help each other, and we have that feeling of security.” He expands on this vision in his book, describing a life with “more opportunities to do sports, go hiking, take up gardening, and get back in touch with nature. We will have time once again to play guitar, paint pictures, read …”
This is somewhat similar to what James Pogue describes as the political left’s promise of “a utopia in the future built out of a collective struggle.” While degrowth proponents emphasize the utopian vision, most people perceive it instead as a call for immediate sacrifice. They hear “less,” “cutting back,” and “giving up” rather than a compelling alternative to the current system — and they have no interest in it. Even more so, the rise of right-wing populism worldwide further underscores degrowth’s inability to channel widespread dissatisfaction with capitalism into a viable political and societal pathway to power and influence.
It seems like the degrowth movement focuses more on convincing people of its economic and planetary logic rather than trying to understand their psyche. As Peter Friederici writes in his book Beyond Climate Breakdown: Envisioning New Stories of Radical Hope, “the more we know about the climate breakdown storyworld, the more firmly many cling to the ultimately illusory securities of the present day, including, perversely enough, more shopping.” Friederici cites Finnish eco-anxiety scholar Panu Pihkala, who argues that the fear of death “very often causes people to strongly defend the status quo of things as a defense mechanism against uncertainty.” The degrowth movement doesn’t have an answer for that.
Now, you may ask — what does this all have to do with businesses? The answer is everything. Businesses are made up of people and exist to create and deliver value for them. If neither the people working for and leading businesses nor their customers buy into the degrowth narrative or believe in its premise, then there is no way it could gain traction in the business world. As it stands, the degrowth narrative presents too high a barrier for businesses.
Challenge #3: The systemic trap
Beyond the first two challenges, there is the question of how companies are actually expected to translate the vision of degrowth into their business models — and how they can do so within a system that is moving in the opposite direction.
In her 2023 Master’s thesis on degrowth business models, Julia Hansen Holme articulated this tension:
“As a critique of the economic growth paradigm and proposal for a deliberate economic contraction, degrowth is viewed as a rather radical and anti-capitalist approach…In contrast, a business model is a social construct or idea developed in a capitalist society to communicate how companies create mainly economic value and achieve competitive advantages, which are key performance measures for a capitalist firm. Fundamental tensions may, therefore, exist in using the concept of business models to explore anti-capitalist ideas such as degrowth, as its application makes an inherent assumption that the two concepts are compatible.”
While degrowth may present a clear vision of “focusing on ensuring human wellbeing within planetary boundaries,” it fundamentally clashes with the systemic drivers that shape business as we know it. As Prof. Christopher Marquis pointed out in its HBR piece last year: “…degrowth does pose an intrinsic challenge to the current capitalist model, because it implies a societal move from excessive consumption and over-production to reduction, redistribution, and the values of care.” This tension is a key barrier to any attempt to operationalize degrowth in business.
What we have is a system that rewards expansion, profit maximization, and continuous economic growth — a system designed to penalize stagnation or contraction. Add to it the challenge of building a degrowth business model that is also financially viable, and you find yourself in an incredibly tough spot.
This tension for companies interested in considering degrowth is therefore not just ideological but practical — it looks nearly impossible for degrowth to succeed in a territory that is very hostile to this idea in the first place. I have to admit that when I wrote about degrowth business models back in 2022, I was more optimistic, but the strength of the current mental model in business (which I describe as shareholder capitalism 2.0) has shown otherwise. Since then, I have come to consider that degrowth is just fundamentally impractical as an organizing principle for companies.
This is why we don’t see any major company experimenting with shrinking its activity or right-sizing its operations. Even among small companies, only a few are attempting it, so it’s no surprise that the list of large companies engaging with degrowth is virtually nonexistent. Even Patagonia — often cited as a potential example of a degrowth business model — does not truly fit it. As Khmara and Kronenberg write: “Ultimately, it does not encourage people to live with less. It continues to sell its products, and it sells them at expensive prices, even if it sometimes suggests that people should not buy its products.”
What we do have are companies experimenting with what can be described as degrowth-adjacent business models — working to reduce overproduction, adopt circular practices, and support resource reduction among consumers. The Ellen MacArthur Foundation’s Fashion ReModel project is a good example. This project, which involves leading brands across high-end, activewear, retail, and mass-market fashion, aims to demonstrate how to decouple revenue from production and resource use, but this is presented under the guise of creating a circular economy for fashion. In other words, the degrowth vision is ‘demoted’ to a lighter, circular vision, that, while still challenging, is more feasible to implement.
For the most part, is what we have right now — circularity that is degrowth-adjacent at best, with ambitions focusing mainly on improving efficiencies upstream along with development of “models that keep products in use in the economy and have the potential to decouple revenue streams from production and resource use: repair, rental, resale, and remaking.” These are all early-stage attempts that, to be honest, don’t yet challenge the dominant take-make-waste system as highlighted in the Circularity Gap Report. The fact that even a diluted version of degrowth struggles to scale is yet another indication of how the harsh reality of capitalistic markets squashes any serious challengers.
A glimpse of hope for Degrowth in Business?
To end with a positive note, while degrowth in business is right now not a feasible alternative — unless you dilute it to circularity, at which point there’s no need to call it degrowth — I still see three potential pathways for its evolution in the future::
First, as Timothée Parrique suggests, businesses can shift to be “(1) not-for-profit, (2) jointly owned as cooperatives, and (3) small enough to be democratically-controlled.” This is probably mostly relevant for small businesses with a clear vision and commitment to doing business differently (some would ask if this is business at all).
The second pathway consists of companies that practice degrowth unintentionally, such as wardrobe apps designed to help people shop within their own wardrobes — services that use very few resources, have low marginal resource utilization, yet significantly reduce new clothing consumption. These are businesses that are driven by innovation rather than ideology, leveraging traditional business approaches like technology and customer-centricity to ‘hack’ the current system effectively.
The third option is companies that publicly align with ‘green growth’ but, in reality, adopt some sort of a synthesis of degrowth and growth principles. IKEA is an example — the company has increased revenues while reducing its carbon footprint (including that of its customers), selling fewer products while keeping those it sells at affordable prices. This approach is incredibly difficult to navigate, requiring a specific business DNA and likely being more viable for private companies, but it still represents an interesting integration of degrowth at a higher level.
At the end of the day, these pathways offer mainly food for thought about an idea that may seem good on paper but, in today’s business reality, is not going anywhere. We need to learn from this failure and design new pathways forward — ones that, unlike degrowth, are both ambitious and feasible.
Raz Godelnik is an Associate Professor of Strategic Design and Management at Parsons School of Design — The New School. He is the author of Rethinking Corporate Sustainability in the Era of Climate Crisis. You can follow me on LinkedIn.
