POSTED: September 3, 2018
Economy | System Dynamics

LowGrow SFC: An ecological macroeconomic simulation model

System dynamics model by Tim Jackson and Peter Victor, developing sustainable prosperity scenarios for the Canadian economy out to 2067
August 2018

LowGrow SFC: An ecological macroeconomic simulation model by Tim Jackson and Peter Victor
Image: The MONIAC (Monetary National Income Analogue Computer) also known as the Phillips Hydraulic Computer or Financephalograph, modelling the national economic processes of the UK (1949, William Phillips) / Wiki Commons

Since the end of the second world war, most countries have pursued economic growth as their top economic policy objective. Economic growth has brought enormous benefits to many people, especially those living in high income countries. However, it is increasingly obvious that the benefits of growth have not been equally shared. Far from it. Income and wealth inequality is on the rise and some of the economic growth in high income countries has come at the expense of poorer parts of the world. With accumulating evidence of environmental degradation, social disruption and population displacement, and with declining confidence in governments and corporations to deliver a good life for all, we need to choose the future we want rather than accept the disturbing consequences of current trends.

The first step is to imagine different possibilities. This is not easy. We need to start from where we are and to ground the alternatives in real data. To help do this Tim Jackson and Peter Victor have created a computer model of an economy that encompasses economic, environmental, energy, social and financial considerations. LowGrow SFC incorporates many features developed over several years of collaboration and brings together: 1) the environmental and resource constraints on economic activity; 2) a full account of production, consumption, employment and public finances in the ‘real economy’ at the level of the nation state; 3) a comprehensive account of the financial economy, including the main interactions between financial agents. The model is of a single high income country which happens to be Canada. Alternative futures derived from the model are likely to be similar for other advanced economies.

Three scenarios generated with the model describe alternative futures for Canada from 2017 to 2067. One scenario is a base case which is essentially a projection of the past into the future. The second scenario introduces a vigorous program of greenhouse gas reduction. The third scenario builds on the second by adding more environmental, social and economic measures that combine to provide sustainable prosperity. The scenarios are not predictions of what will happen, but an exploration of possibilities. Interested readers can explore the implications for themselves in the online beta version of LowGrow SFC.

Links

LowGrow SFC is part of a suite of system dynamics models developed by Tim Jackson and Peter Victor, including SIGMAwhich addresses the key challenge of inequality in the context of declining growth rates; and FALSTAFF, which explores the financial and economic dimensions of a post-growth economy. For details, related publications and access to the simulations, please see Tim Jackson’s website.

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