The Economy in Germany

At present the future viability of capitalism is much discussed. The economist Niko Paech advocates a shift from economic growth and a return to regional exchange relations. With Goethe.de, he spoke about his model for a post-growth economy.

Professor Paech, climate change and the scarcity of key resources make a fundamental reform of our economic system necessary. Many economists are banking on “qualitative” growth. They envisage new technologies bringing the economy and ecology into harmony, decoupling growth and resource consumption. Is this realistic?

Economic growth is measured by gross domestic product; it’s the sum of all goods and services produced by the division of labor. The form of economic activity measured in this way always means moving a good or service from point A to point B. And there’s the rub: no productivity transfer is possible without consuming energy. At first we hoped for this from digitalization, but it has failed spectacularly. Viewed in isolation, a digitally accomplished service has in fact something dematerialized about it. But the enormous energy consumption in the use and production of IT hardware, and the required infrastructure, foils any dematerialization. Further rebound effects arise from igniting new demands, because every investment in new technologies creates additional income with the increase in gross domestic product. All other technologies – think of passive houses, renewable energies, etc. – are subject to the same problem.

No prosperity without an environmental toll

If economic growth isn’t compatible with climate and resource protection, yet growth is the foundation of our prosperity, do we then need a new definition of prosperity?

That, I think, is the second question. Sticking to the previous form of prosperity is not and never will be possible without taking an environmental toll. Only once we’ve accepted this does the next question arise: Is that an apocalyptic message, or are there other ways of making life meaningful than only by the gigantic escalation of growth?

There hardly seems to be a counter-model to the capitalist system. Do we lack the imagination to conceive of alternatives?

Whether we can imagine it or not, we’ll certainly introduce a different economic model. But we won’t do it voluntarily. Modern consumer societies aren’t capable of reform. They’re in need of therapy. But we don’t have any therapists. Because first of all they would have themselves to set an example of what they recommend to others. You can’t be constantly sitting in airplanes and at the same time talk about climate protection. You can’t drive a big SUV and lecture students about sustainability. You can’t live in a big one-family house and tell people that soil sealing is a major environmental problem. Junkies can’t persuade each other of the need to go cold turkey. Only once the price of a barrel of crude oil hits the 200 dollar mark and entire industries collapse, carrying others down with them, will politics respond to the crisis. That will be the pacemaker for a movement towards a post-growth economy.

Relearning the art of consuming

Suppose the policy choices could be made now – what measures would be needed to pave the way for a post-growth economy?

A central element of post-growth economy is the drastic reduction of the amount of produced goods. This is bound up with the need to simplify cutting and redistributing working time. Here the state could establish important groundwork. Other measures pertain to the monetary and finance sector, such as the introduction of regional currencies with negative interest. This money loses value when it isn’t spent, thus preventing speculation. Commercial banks should be permitted to give credit only when it is covered 100 per cent by deposits. In this way we could curb the madness of our debt money system.

Also important is an immediate moratorium on soil sealing. Under no circumstances should one more square meter of soil be sealed. Those who want to invest in housing should acquire and convert already developed area. In addition, we need a decommissioning program for highways and airports. After coal power plants, these are the worst climate killers. Schools should introduce mandatory courses in climate protection, energy and sustainability. They should also again teach manual skills. We’ve completely lost the skills required to repair something ourselves. Further, we need a focus on individual CO2 or eco-balances as the only reliable target value for sustainable development.

Wouldn’t this also mean that we must change our habits of consumption drastically?

A post-growth economy not based on sufficiency services, that is, the radical reduction of demands, is inconceivable. This has nothing to do with renunciation, but rather with relearning the art of consuming. The critical bottleneck in modern consumer societies is not so much money as time. With only a very limited contingent of time, we are confronted with more and more consumer options. In such a world reduction doesn’t mean renunciation, but rather protection from sensory overload, stress and ephemerality.

Can the transition to a post-growth economy be managed without violent social conflicts?

I hope so. Certainly it would help if we would already now adjust our demands and capabilities to a more modest scale. I understand this as expressly not a moral commandment, but as pure self-protection. We have to make ourselves sufficiently resistant that the inevitable changes will be less painful. And so educate our children that they don’t develop expectations of a way of life which in future will simply no longer be feasible.