Productivity has been slowing in advanced economies for several decades, and today’s potential productivity increases are among the lowest seen in more than a century, except in times of war. A drop in Europe compared to the United States, which has intensified post-pandemic, adds to this overall slowdown. With the start of a massive spread of artificial intelligence (AI), its effects on productivity increase hopes for a new industrial revolution, despite current macro estimates appearing disappointing.

The recent slowdown results from long-lasting yet transitory factors linked to the financial crisis and the delay in deploying new technologies. However, particularly in the context of the clash between the COVID-19 crisis and rising energy prices, a recovery in productivity cannot be achieved without policies that facilitate the reallocation of production factors, the effective adoption of AI-related technologies, and the energy transition. Reform by European institutions appears essential to encourage companies to take more risks and implement critical measures, particularly in the digital sector.

If productivity does not accelerate in the next decade, major challenges will be posed to fund significant issues such as climate transition, population ageing, and financial deleveraging. It will then be difficult to respond to expectations for improvements in purchasing power, of which productivity improvements remain the only source of sustainable financing in the medium term.

For a sustainable post-Covid-19 recovery strategy, humanity faces two major challenges: 1. Just prosperity: The creation of a resilient and fair economy that delivers prosperity for all; 2. Public and planetary health: protect human health, together with the reduction of environmental impacts below thresholds of planetary boundaries including greenhouse gas emissions. The Covid-19 crisis could represent an opportunity for responses that integrate different goals, or a drawback if some are prioritized without considering their impacts on the others. New kinds of informed solutions are needed to ensure long-term sustainability in social, economic, and environmental terms. This article addresses the research question: How could developed countries manage a sustainable recovery that provides a good life for all within public and planetary health? First, it argues that economic growth is not compatible with environmental sustainability. Green Keynesianism is based on the hypothesis that economic growth can be decoupled from environmental impacts, but this has not happened and it is unlikely to happen. Second, it introduces degrowth as an alternative to green growth. Degrowth challenges the hegemony of economic growth and calls for a democratically led redistributive downscaling of production and consumption in industrialised countries as a means to achieve environmental sustainability, social justice, and well-being. Third, it traces the recent evolution of the term degrowth from an activist slogan to an academic concept. Last, it calls for an alliance of alternatives that could foster a deeply radical socio-ecological transformation.