What technical ideas could create infinite wealth

Is there a compulsion to grow?

With the Paris Agreement, the international community agreed on new, ambitious goals in climate protection. In connection with this, the question is often asked whether these climate targets are compatible with further economic growth. Our industry-based and therefore resource-intensive society has been discussing for years whether further or even permanent growth is possible and sensible. Supporters of the post-growth society in particular like to postulate, firstly, that the limits of growth will be reached in the near future, and secondly, they criticize that economic growth and (mostly mentioned in the same breath) capitalism are harmful to humanity. The growth critics see an end to growth in the foreseeable future, because non-renewable resources and ecosystem services are not available indefinitely. The increasing shortage of oil, gas, fossil fuels and water as well as the increase in climate emissions would endanger the continued existence of mankind because they would create conflicts, and could even lead to war.

According to the growth critics, this requires a rethinking towards alternative energy systems, restrictions in consumption and a turn away from the idea of ​​growth. So far, however, most attempts to implement corresponding ideas that could solve the environmental problems have failed. Often, through the use of resource-saving technologies, the demand for products that are produced at the expense of the environment is even increased. In addition, the introduction of alternative energy systems at other points in the value chain or (in the case of environmentally harmful production steps being outsourced to other countries) abroad has a negative impact on the environment. Progress should not only be geared towards efficiency, but must also be oriented towards sufficiency. The growth critics are also of the opinion that quality of life and prosperity must be guaranteed regardless of economic growth. More important are one's own happiness, ethically responsible behavior, solidarity and the critical reflection and further development of one's own person, but not consumption, profits or status thinking.

On the other hand, it is questioned whether our society is even able to exist without growth. The transition to a sustainable society would not work without a new lifestyle, and this lifestyle provided restrictions in production, income and consumption. Our society is not ready for this. So the following questions arise: can we get by without growth and can such a society become a reality? Is it necessary? Do we want it? Or is there a compulsion to keep growing?

The following answers can be given:

1) The German population and also German politics are very strongly focused on growth. 81 percent of Germans declare (according to the sociologist Meinhard Miegel): "We need continued economic growth". 73 percent say: "Germany cannot survive without economic growth". 61 percent affirm the statement: "Without growth everything is nothing". Although growth has to be viewed differently, most people find growth to be important and good. Randers (2012, p.392ff) (one of those authors who first discussed the limits of growth in public under the name Club of Rome in 1972) describes this as a gut feeling that is, however, misleading. It can be explained by our recent history, because economic growth has reduced many problems in the past decades. Income, prosperity and the average standard of living have increased significantly on average. Growth went hand in hand with capital accumulation and investment, which also benefited the health and welfare systems. Life expectancy is higher than it used to be, as is the level of education. The creation of new jobs and rising wages are also linked to growth. We associate all of these positive developments with economic growth, and it is certainly no coincidence. Economic growth has brought many achievements with it. Growth, especially GDP growth, is also portrayed as positive in the media.

However, what people say sound like growth is an end in itself, almost an end in itself. But that's not really it - economic growth in itself is a result that emerges as a by-product of our inventiveness and efforts aimed at making better lives possible. But if you follow the statements of the people, you are inclined to realize that growth almost reflects a value in itself.

2) For German politics, adequate and steady economic growth is even stipulated as a binding goal in the law to promote the stability and growth of the economy. Here it says: “In their economic and financial policy measures, the federal government and the federal states must observe the requirements of macroeconomic equilibrium. The measures are to be taken in such a way that, within the framework of the market economy, they simultaneously contribute to the stability of the price level, to a high level of employment and external balance with steady and appropriate economic growth ”(§ 1 Law for the Promotion of Stability and Growth of the Economy). There is even a legal norm that obliges our state to grow economically.

3) But - as the post-growth society preachers rightly criticize - growth not only leads to improvements, it also changes our environment and thereby in turn influences our living conditions, and this sometimes with negative consequences. It is not free from side effects. For example, the rate of skin cancers has increased dramatically because deforestation and the burning of fossil fuels have released greenhouse gases into the atmosphere that have enlarged the ozone hole. With the growth of the last few decades, we have changed our world - and perhaps (the growth critics would say: certainly) we are not in the process of permanently improving it, but instead worsening it.

4) Growth should improve people's living conditions - this is usually measured by the fact that people have more goods or more valuable goods at their disposal. Growth does not have to be limited to increasing economic sizes, but can also be geared towards making better use of our natural resources in terms of sustainability. Currently, growth is measured using the rate of change in gross domestic product (GDP). The consumption of resources and the damage to the climate are therefore not adequately assessed in our growth measurement. In fact, GDP development is the wrong way to measure economic growth.

5) Reliable and cheap energy is an important factor for economic development and prosperity. Their cheap availability is not an indispensable cornerstone: our prosperity and our growth do not necessarily depend on cheap energy. Because it is part of the essence of capitalism or the market economy to adapt to changing scarcity conditions. If the costs for energy rise (or if scarcity-adequate and thus higher prices are paid for the use of natural resources), then energy-intensive consumer goods become correspondingly more expensive and consequently less in demand. However, this in no way leads to a general renunciation of consumption; there will only be substitution processes between the goods. In addition, higher energy costs create incentives to research into substituting the energy factor in the production process. Technical progress could then be geared towards energy-saving production instead of using energy as intensively as possible. Such progress is not to be expected as long as the non-renewable raw materials are as cheap as they are at present. Progress comes from necessity. It takes place when the need arises. At the moment, the prices indicate no need here. However, growth can also be less harmful to the climate, and it does not necessarily have to be based on an increasing use of non-renewable resources. To do this, however, the non-renewable resources must first become more expensive.

6) It is quite possible that in the event of an abrupt change to a resource-efficient economy, there will be temporary slumps in growth (or even a decline in prosperity). In this respect, it is important not to delay the pursuit of sustainability goals. Above all, natural, non-renewable resources must be traded at prices that reflect their real scarcity. This is not the case if the price merely reflects the cost of mining the resource. States often sell their natural resources far below their value (sometimes they even give subsidies for promotion) because they are interested in the rapid extraction of raw materials, because this extraction goes hand in hand with the establishment of relevant industries and thus with a strengthening of the regional economy. If the natural resources were privately owned, they would be used much more sparingly. Private owners think more long-term here than state agents. In other words: If, for example, oil wells were predominantly privately owned, the private owners would leave substantial portions of the oil in the ground in order to sell them later when higher revenues can be expected for the oil due to increased prices. As long as companies only receive concessions for mining, they do not have sufficient incentive to postpone production.

7) In a capitalist system it would very well be possible to produce in a way that is considerably more resource-efficient. And our market economy does not collapse even without growth - the nature of the market economy does not need growth as a prerequisite, but produces it as a result. It is different with the political system - with today's social institutions it will be difficult in Germany to get along without growth. The primary problem is the pay-as-you-go system in statutory pension insurance. The younger generation supports the older generation; and if the younger generation is numerically smaller than the older generation due to demographic change, then they have to produce more per capita in order to keep the pension level constant. This makes growth necessary. However, such institutions can be changed in the long term - a gradual conversion of old-age insurance from a pay-as-you-go system to a funded system makes sense in this respect. In addition, the national debt has to be reduced, as otherwise politics would need growth in order to be able to pay the interest on the national debt in the long term.

8) Because growth also helps to finance constantly increasing (private as well as state) expenditure. Economic theory in particular ascribes the fact that people are always interested in something more or better. Its maximum benefit lies in a shopping basket that provides infinite quantities of all goods - the assumption of unsaturation applies. Self-restraint or moderation do not exist in the economic approach. For this, the economy knows the scarcity principle: goods are only available in finite quantities. This restricts the consumer behavior of the individual and thus also of society. Growth makes more consumption possible and thus increases the benefit of the individual, but ultimately the possible expenditure always remains limited, no matter how far the restriction is shifted. Perhaps we humans actually want to spend more and more, but economic growth cannot and will not lead us to paradise, where there is no longer any scarcity or shortage. Consequently, it makes no sense to view positive growth rates as a social goal.

9) Growth is not a goal, it is rather a consequence of achievement and self-realization. People are motivated by the urge to want to improve something that already exists. They invent new things, they turn these inventions into innovations, they imitate the ideas of others. This is how progress comes about, and progress leads to growth. Growth cannot be set as a goal; it is the result of our actions. The desire for social recognition is also a driver for growth. People strive to gain status; they want to improve in the social hierarchy. This leads to efforts; people invest time and effort in order to compete with others as well as possible. It is by no means wealth or the opportunities for consumption associated with wealth that lead to social recognition. In a nutshell: Recognition does not come from being rich and beautiful. You gain social recognition through performance. The professional advancement associated with the achievement and the increasing prosperity following it are rather the outwardly visible signals of achievement. Growth arises from these achievements, and growth can only be abolished if achievement is no longer rewarded by advancement and reputation. But nobody wants that, not even the post-growth authors.

10) People want recognition for their accomplishments in the form of increasing wealth. They do not want to descend in the hierarchy, but rather to keep up, even if they do not provide the required performance. With status symbols they try to send the signal for achievement to society. The actual prosperity that has come about through the achievement is exaggerated. Financial means and thus social resources are used to signal status instead of fulfilling consumer wishes. This is precisely what growth critics like to complain about - but it is inevitable as long as people strive for recognition for performance and performance can only be observed indirectly through the wealth it generates.

We shouldn't chase after positive growth numbers. Growth is not an end in itself. But we don't have to forego growth either, because growth comes naturally from our efforts to make the world a better place. We should not do without this striving for improvement, and that is why we do not need a world without growth. However, we should finally provide the non-renewable resources with adequate prices so that our economy treats them more gently and has incentives to develop sustainably with progress.

Swell:
Miegel, M. (2010): Exit. Prosperity without growth, Berlin

Neumann, M. (2012): Fortunately, growing. Seven wisdoms on growth, prosperity and well-being, discussion paper of the Roman Herzog Institute, No. 20, Berlin / Cologne

Randers, J. (2012): 2052 - The New Report to the Club of Rome, A Global Forecast for the Next 40 Years, Munich

CategoriesMarket-related, growth-politicalTags growth, forced growth