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  Number 210 | Enero 1999
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A Way Out of the Economic Growth Trap

These are advanced and visionary ideas from the North that we in the South should know about, reflect upon and debate, because what is ultimately at stake is the course that this planet will take and the destiny of the human species.

Ralf Fücks

The limits of growth: A quick look back

The first Club of Rome report, with the now-historic title, "The Limits of Growth," was published 25 years ago. That groundbreaking document placed at the center of social debate a warning about the destruction of natural resources and the need for changes in policies, economies and lifestyles. The depletion of natural resources and the limited load-bearing capacity of the basic elements—soil, air and water—were described as natural limits on the growth of the economy and the population, which if overstepped could trigger off catastrophic crises. Exponential economic growth on a world scale would lead to the self-destruction of human civilization. The study also proved that the relationship between economic growth (measured by the gross domestic product) and social prosperity had been reversed. The external costs—economic, social and health—of economic growth were outstripping the nominal growth in national income.

The result of this analysis was to say "less is more," a slogan taken up by the Greens during their first election campaigns. Now such a slogan would not even occur to them, lest it be suspected that they ideologically support the dismantling of the welfare state.

In these twenty years the environmental debate has advanced by leaps and bounds at the international level, as witnessed by the holding of the UN environment and development conference in Río de Janeiro in 1992. This made the concept of "sustainable development" into an almost obligatory model, though the participating governments made no binding commitments to it.

The environmental movement started out criticizing economic growth, but with time it changed its position. Under pressure from environmental protesters, the industrialized societies of the North invested large amounts of money in filters, sewage purifying plants and solid waste treatment. Thus the air became clearer, the rivers cleaner and the avalanche of rubbish was channeled in a more organized way. At the same time, industry discovered that reducing energy and natural resource consumption could make potentially big economic savings. Technology and more efficient recycling techniques led to a partial breaking of the correlation between economic growth and consumption of natural resources. The discovery of new sources of economically exploitable raw materials, particularly fossil fuels and metals, increased more quickly than consumption so that predictions of the collapse of industrialized civilization due to a lack of natural resources failed to materialize.

Sustainable development: The goose that laid golden eggs

This led to the new utopia of "sustainable growth," the idea that permanent technical innovation would serve to reduce the consumption of resources and environmental aggression to such an extent that it would open the way for new growth markets and increased employment. Natural resource consumption would be reduced: ecological growth would be like the goose that laid golden eggs...and provided down and meat into the bargain. The happy message was that we will escape the ecological crisis with a little help from the technical and scientific revolution's magic wand, the so-called "factor 4." At the same time we would be able to save both the welfare state—which is based on distribution of the growing surplus—and the hedonistic lifestyle of the urban middle classes.
Franz Alt very successfully formulated a harmonious connection between ecological change and Germany's economic offensive within the framework of international competition: "The industrialized nations that are the first to realize that obtaining energy from the sun, wind, waves and biomass will be at least as important in the 21st century as car production was in the 20th will do business all over the world, will not have to worry about unemployment, will guarantee their national industry and will benefit nature. So who will be the first?"
There are many actors in this unofficial alliance favoring ecological modernization: conscientious businesspeople and union leaders, engineers, ecological peasants, the people who set lifestyle trends, the Greens and the more forward-looking currents within other political parties. It is potentially a social and economic majority and offers a great number of latent opportunities in this field: solar technology and the exploitation of residual heat in thermoelectric activity, three-liter cars and hydrogen-propelled airplanes, energy-efficient electrical household appliances and houses with low energy consumption, miniature technology, recycling, renewable natural resources, adapted biotechnology and the shifting of communications onto the data highways are just a few of the promising elements of ecological transformation, along with the creation of an ecological tax reform that would serve to catalyze this process.

Ecological innovation: Only half of the ecological truth

It would be stupid not to exploit the opportunity to combine ecological demand with economic common sense; a strategic constellation in which the Greens and the ecological movement would be able to make proposals for the future will not be easily repeated. However, obstinate doubts about the consistency of the "sustainable growth" model appear to be hanging on as a common denominator of both ecology and economy.

It is not just that the destruction of the landscape and the extinction of species, the extermination of forests and desertification of fertile soils, the extreme exploitation of fishing resources and contamination of the seas are growing almost uncontrollably, but also that the savings achieved through increasing efficiency in the energy sector or the automobile industry have been countered by rising consumption. The technological-ecological progress in the highly industrialized countries has produced a leveling off, albeit at excessively high levels, of water and energy consumption and of nitric oxide and carbon dioxide emissions, while in the regions of rapid industrial expansion in the South environmental damage is advancing with giant strides.

Our way of life and of production, with their immense consumption of natural resources, cannot serve as a model for the remaining 80% of humanity without producing irreversible damage to nature. The energy consumption and the emissions produced in the industrialized metropolises must be reduced by 80-90% in the coming decades. This would give the societies of the South the economic and social space to develop without overexploiting the global ecosystem. Ecological modernization and breaking out of the spiral of growth are not alternative choices, but rather two sides of the same coin. It is not just a question of promoting technologies, products and infrastructures that are more environmentally friendly but also of reducing material production and consumption.

The return of growth madness

In times of mass unemployment and falling income for the majority of the population, criticism of economic growth appears almost frivolous, a whim of well-educated citizens saturated with prosperity and with a guaranteed pension. But this is no passing whim. From business corporations to the most alternative left-wing professionals, from liberals to social democrats, all agree that the dynamic of economic growth has to be reactivated in order to overcome social and financial problems. The debate is focused on "how": whether through continual deregulation, a savings promotion policy and a reduction in company costs or through a policy of interest rate reduction, state investment programs through credit financing and "increasing the purchasing power of the masses." It is the same old debate between the theoreticians of supply and demand, between monetarists and Keynesians.

The ideology of economic growth of the 1960s and `70s is being evoked with ever greater emphasis as it becomes increasingly isolated from present-day reality. Even the predicted 2% increase in the gross national product for 1997 has had no positive influence on the labor market or on state tax collection, which have had to be revised downward again. Those who believe that economic growth can reduce unemployment and protect the welfare state are building on sand and risking the irreversible ecological collapse of the planet.

Falling growth rates: An economic tendency

It is also argued that the age of high growth rates in traditional industrialized societies has fallen behind for economic reasons. Technological progress is based on innovative productive processes rather than innovative products. Its main effect should be to rationalize the production of goods and services and not to create new markets for consumer goods. The same is true of modern communication and information technology. There is a lack of radical basic innovations that could generate a new cycle of private demand, similar to the demand for cars, electrical appliances or recreational electronics.

Increased intensity of capital raises the cost of each new job post in industry and in skilled services, as well as the social costs of economic growth in the form of state-funded research and development. Scientific training, transportation and information infrastructure, and investment and export incentives all increase according to how developed the economy is. Each positive percentage point in economic growth requires higher spending on state services while tax income conversely declines per each unit of growth. With this the cost/benefit ratio of public investment programs also decreases while the fiscal deficit reaches alarming levels.

Policy in times of "less"

Critics of the growth fetish are told that "without growth the labor markets will collapse, it will be impossible to finance the social security systems and public finance will drop." But in fact the reverse could be said, that it will never be possible to resolve any of the big social problems using the instruments of the policy of growth. Whichever way you look at it, a prudent policy must take account of the tendency of the growth rate to decrease. The time has passed when the struggle for income redistribution was neutralized by the slogan "more for everyone" and it was possible to establish an individual financing program for each "problem group" and set up a new public administration agency to oversee it. The esteemed strategy of "both this and that" no longer works as a policy instruction manual. Future decisions will have to be made on the principle of "either this or that" and clear priorities will have to be established.

When economic growth therapy no longer works, social crises have to be treated with social innovations. The question of what the future situation in terms of employment and social security will be, or of how financial policies and the tax system should be developed when they can no longer be based on permanent economic growth are revolutionary challenges for scientific-intellectual thinking and for social imagination. Several elements of this "re-invention" of society for the ecological era have been undergoing testing for some time now: from cooperatives of producers and consumers of agricultural products to ecological neighborhoods, from the collective bargaining agreement for a 28-hour work week at Volkswagen—more free time against less income—to the countless social and cultural initiatives that mobilize voluntary work and the militancy of the citizenry.

Hold the line: An environmental imperative

If the term "sustainable development" is to really mean something we need two things: technological-ecological efficiency and the will to hold the line, to reduce our material aspirations.

The present level of mobility in the industrialized metropolises will not be compatible with the environment even with the three-liter car and the expansion of the rail system. This is not the end of a "change in transport policy." The change includes reducing long-distance freight transport, private traffic and recreational flights. The growing demand for housing space and the persistent tendency to build one-family houses is in contradiction with the protection of the landscape and implies high energy consumption levels. The ecological motto is that things have to get closer. The current consumption of meat is hard to reconcile with decent treatment of livestock, environment-friendly agriculture and low food prices in the supermarkets. The problem is, who's going to tell this to the people who still regard a filet steak as a symbol of prosperity?
Whatever name is given to the important message that "less" in terms of salaried work and income also provides the opportunity for "more" in terms of leisure, creativity and a richer social life, there will always be a feeling that current life styles and consumer aspirations are being renounced. And this is not true only of "the rich." Renunciation is a politically taboo word in the tradition of the alternative left, particularly once real salaries and social benefits began to be reduced in the context of economic globalization and a transformation in public finances. For now, the policy of "holding the environmental line" runs the risk of being seen as an ideological justification for dismantling salaries, something that is actually taking place but should not be allowed to influence the decision.

A new social justice policy

We must learn a new policy of social justice that does not aim to distribute growth or indiscriminately defend acquired economic rights, but rather seeks to distribute "less" more justly. This policy must offer guarantees against falling into poverty and existential insecurity, as well as offering ways to open ourselves up to new alternatives of a "good life," from preferring public transport over private cars or finding pleasure in enjoying natural landscapes close to home, to enjoying general access to education and culture. If we want to build bridges towards a life that is not geared to maximizing the individual consumer, we must stop the growing reduction of public welfare and collective institutions such as public high schools, civic and cultural centers, parental and child support groups, sports associations and cultural initiatives as a result of the treasury's efforts to cut public expenditure. A tax and budgetary policy aimed at "impoverishing" public administration in the interest of increasing the private prosperity of a social minority is contradictory to sustainable development.

Civil society and free time

The market and the state will still be the central levels of control and management in modern societies in the future. But it is possible to say that in a "self-supporting" social order, initiatives of a non-commercial nature and those aimed at the citizenry's self-organization will grow in importance. That is, there will be a growth in the true "civil society."
The idea is not to cancel out the money economy, the market or economic competition, but to limit its scope and reintegrate the economy into society instead of subjugating society to the economic principle of "a market economy instead of a market society." If we really want to avoid the opposite extreme to growing statism, we have to build a middle ground of social activities that is beyond both the market (productive work) and the state (bureaucracy).

This requires more free and self-determined time for everyone. The ecological policy that seeks a way out of the economic growth trap has to form a strategic alliance with the policy of reducing work in all its variations: a continual shrinkage of the work week in accord with increased productivity, the acceptance of variables in how many years one should work and how long a working life is, subsidized training schemes and part-time employment with social security benefits.

Our joint objective should be to set out along the path to "technological progress" in two directions. The first of these is toward a revolution in technological-ecological efficiency, in other words toward the development of products and processes that are less contaminating and more efficient in their use of raw materials. The other is toward the constant reduction of "socially necessary work" (Marx), as opposed to the limitless expansion of the productive apparatus and the production of goods. Such a strategy would also strengthen the foundations of civil society as it improves the possibilities for larger numbers of citizens to participate in the public affairs of their societies.

Ralf Fücks presented this paper at a conference organized by the Heinrich Böll Foundation and the German Federation for the Environment and Nature (BUND) in Hamburg in May 1997.

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