The Economy in Germany

The belief in the dependence of prosperity on economic growth is almost of a religious nature. In his book “Exit. Wohlstand ohne Wachstum” (“Exit. Prosperity Without Growth”), Professor Meinhard Miegel, a leading economist, is now demanding the reverse.

Good news for Germany: The Federation of German Industries (BDI) is expecting economic growth of more than three percent in 2010. In view of the global economic and financial crisis that has just been overcome, that is cause for celebration. In contrast, Professor Meinhard Miegel’s latest book, Exit. Wohlstand ohne Wachstum, sends the proverbial shivers down your spine. The text on the dust jacket leaves no doubt as to the author’s intention: “Economic growth has become the ersatz religion of our society. Many people regard it as the prerequisite for prosperity, personal happiness and an efficient social system. But what happens when there is no more growth? What can, and what should take its place in order to enable us to have a fulfilled life.”

Meinhard Miegel, a leading economist, is asking the question of the meaning of life and even more that that, of alternatives to economic growth. From 1977 to 2008, he was director of the Bonn Institute for Economic and Social Research (IWG). Since 2007, Miegel has been Chairman of the Foundation for Cultural Renewal, also based in Bonn.

Professor Miegel, in her government declaration, Chancellor Merkel stated: “Creating growth is the goal of our government.” In your book Exit – Wohlstand ohne Wachstum you contradict her. What is the problem with growth?

Growth, or to put it more precisely, material growth, is ambivalent. Like many medicines, it has undesirable and even damaging side and after effects. These damaging effects have become more and more manifest over time: the excessive consumption of resources, overloading the environment with pollutants and the erosion of society, and others. That is why a balance has to be found between the indisputably positive effects of growth and its damaging repercussions. If that happens, it will be seen that the potential for growth that is sustainable for resources, the environment and human beings is very limited. More cars as a result of the car scrapping incentive do not fit in with it at any rate.

Was it not economic growth – the economic miracle – that resulted in Germany’s prosperity?

Certainly, it caused material prosperity, but it also caused many problems. Incidentally, Ludwig Erhard pointed that out back in the 1960s: economic growth and an increase in material prosperity can and must not be everything. They make us dependent. And something that should not be forgotten is that the increased prosperity of the last decades is like a bill, much of which has yet to be paid. Billions are needed simply to repair the environmental damage that has been done and to replace dwindling resources, which will tangibly reduce future prosperity.

Is it not the case that the problem is not economic growth per se, but the abuse of certain rules of the economic system?

Abuse is always a problem. But even economic growth per se does not bring pure joy and salvation, as it is often made out to do. As I said before, it is ambivalent.

Does growth have limits?

That depends on the growth. There are clear limits to the growth that uses resources and places a burden on the environment. These limits are coming closer every day or have already been reached.

So the Club of Rome was right after all?

Not in all the details, but in its basic statement that there are limits to physical growth in a physically limited world.

How is prosperity without growth possible?

In the early industrialised countries, we are already materially prosperous compared with other historical periods and other countries. The fact that this prosperity is quite unequally divided is another matter. But why must this prosperity keep on growing in order to be seen as prosperity? There is something wrong with that perspective.