Does prosperity depend on economic growth? Is GDP growth beneficial if it relies on irreparable environmental degradation? Nils Klawitter looks at these issues in this article for Der Spiegel. He speaks to “rogue” economists about their “radical” less-is-more and slow-growth theories of evolutionary economics.
As economics students we were taught that GDP growth is the key sign of economic health, it was a basic assumption that prosperity comes only through growth. It seemed simple enough, but perhaps that was the problem, perhaps it was too simple. In an eco-system nothing can grow without bounds, all systems need balance and with financial crisis all around us it is becoming clear that an economic system that discounts waste and the environment, over consumption and excess, is doomed to fail.
Klawitter spoke to German economics professor Niko Paech who thinks…
“…that we should be giving up and sharing some of our wealth. The labor market he envisions is full of thriving repair and maintenance shops. He wants to see our society become more civilized with less: less material, less energy, less waste and less pollution. He also believes that resources should be managed more effectively. We should produce the kind of clothing, he argues, that can be handed down from one generation to the next instead of throwing things away after wearing them just a few times.”
As the major developed economies remain mired in recession, Australia excepted, we are seeing developing countries streak ahead with double-figure growth rates and equally dizzying rates of pollution growth. It’s clear that growth has its limits and that we need to adapt.
“Economists have largely disregarded the environmental consequences of growth.” Klawitter says. For them, the key benchmark of prosperity is GDP, the sum of all products and services produced in a given country. However, GDP does not factor in the overexploitation of resources, the destruction of biological diversity, air pollution, noise, the expansion of impervious surfaces known as soil sealing, and the poisoning of groundwater.”
In the article Paech recounts being confronted by a group of highly educated retirees who are relentless in their questioning.
“How can you pay for our social systems when people are working 20-hour weeks? they ask. But we already can’t pay for those structures today, Paech replies. In his system for the future, he explains, people would lead a sort of “subversive double existence.” They would share and recycle, thereby outsmarting an industry geared toward nonstop renewal. People would only work 20 hours a week, but they would also have 20 hours of “market-free” time to provide for themselves.”
The article leans awkwardly to the left and espouses a view that, to many, is idealistic, but it asks the pressing question of why we keep rushing forward with a system that the past has shown does not work. We have affluence and excess but it is not sustainable and it is certainly not equitable.
“He is not interested in criticizing a few greedy executives for destroying a supposedly good system. For Paech, the system itself is broken, and instead of repairing it, he wants to rebuild it from the ground up.” Klawitter says.
In the interests of balance the flip side is represented with reference to the New Social Market Economy (INSM). This German organisation is funded by industrial labour groups and espouses the need for greater productivity, for financial responsibility to rest more with individuals and for smaller government to stimulate competition. This is the laissez-faire dominion of Ayn Rand and economic rationalists and it seems their solution to the barriers faced by limits to growth lie in that ever-gleaming and shining light …technology. They have slogans such as, “Less CO2 needs more growth.”
Whether you believe that our present course is unsustainable, or whether you feel the government is holding you back with too much taxation and welfare; this piece is a good starting point for a debate about the future of economic policy and the potential for creative thought in this deeply conservative field.