Ignoring the Limits

IGNORING THE LIMITS


40 years ago the economic model oriented in growth and exploitation of nature was questioned. This question is still burning today.


By Sonja Fercher



[This article published in the Austrian blog journal Arbeit & Wirtschaft 10/2015 is translated from the German on the Internet.]



More strongly than ever before, “humanity is now tending to accelerated growth of population, faster utilization of the soil, increased production, consumption and manufacture of pollutants. It is assumed the natural living space allows this and that science and technology can overcome any obstacles.”


This sentence sounds as though it were written yesterday. This impression is misleading since the quotation comes from 1972. At that time a broad public was occupied with the “limits of growth.” This sentence is found in a book titled “Limits of Growth.” A study commissioned by the Club of Rome on the future of the world economy is summarized there.


FORESIGHTED


The conclusions of the “Limits of Growth” are foresighted while the Club of Rome itself is controversial on account of its nearness to business. Some are skeptical about its analysis. “The absolute limits of growth on earth will be reached in the next hundred years if the current increase of the world population, industrialization, environmental pollution, food production and exploitation of natural resources continue unchanged.”


Since then many different actors have grappled with the future-friendliness of the predominant growth model under the current keyword sustainability. Effects on economic- and environmental policy should remain modest. The bursting of the financial bubble in 2008 hardly changed anything. In the mainstream, stimulating growth is still a central political-economic goal.


A CHANCE THAT SLIPPED BY


This crisis is only another warning shot of the current economic system and could have been one of many occasions for fundamental rethinking. “This crisis according to the unanimous opinion at that time could offer a unique window of opportunity to leave behind the neoliberal path of development taken since the end of the 1970s,” wrote Bertholt Huber, chairman of the IG Metal union in “Changing Course for Good Life.” These hopes were long disappointed, Huber says. The measures taken after the crisis have “a symbolic and structurally-conservative nature”: no effective regulation of the financial markets and no new orientation of economic policy toward sustainability.


The German IG Metal union is only one of many actors occupied with alternatives to the present economic system. The root of the problem must be treated and this root is the economic model based on growth and exploitation of nature.


In 2012 a mammoth international congress was organized with the title “Changing Course for the Good Life.” A year before, such a change of course was set as a goal for the union day. What would an alternative model look like? Bertolt Huber explained the ideas of IG Metal union. “The question of a “humane economy” is central. How can qualitative growth, good work, justice and democratic participation for everyone be successfully achieved?


NEW CONCEPT OF PROSPERITY


In Germany, an Enquete commission has focused on this theme. 17 Bundestag delegates and 17 external experts proposed a new concept of prosperity and a new measurement of prosperity.


This new perspective must include “social and ecological dimensions of prosperity alongside material prosperity.” The growth dogma is put in question because it does not lead automatically “to more material prosperity for everyone, more social justice and the solution to ecological challenges.”


In addition the commission proposed a definition of quality of life that includes: “the material living standard, access to work, quality of work, social distribution of prosperity, social inclusion, cohesion, an intact environment, the availability of limited natural resources, education changes, education level, health care, life expectancy, the quality of public services, social security, political participation and subjective quality of life and satisfaction.”


MORE THAN MATERIAL NEEDS


The ideas of British economist Tim Jackson, one of the most renowned critics of absolute faith in growth, go in a similar direction. In his work “Prosperity without Growth,” he writes: “Prosperity involves the quality of our life and relations, the load capacity of our communities and our sense of a common project.”


This conception goes far beyond the satisfaction of material needs. For Jackson, prosperity is “deeply anchored in the quality of life, health and happiness of our families. It appears in the strength of ou8r relations and in our trust in the community. Prosperity is expressed through satisfaction in work and in the consciousness that we share values and goals. It rests on our potential to participate fully and completely in social life.


However all these ideas have an essential limitation: the development must occur “within the ecological limits of a finite planet.”


PERSONS FOR CHANGE


These different ideas do not move in a vacuum but are shared by many persons. According to a 2012 survey of the Bertelsmann foundation, the following five desires are most important: health, personal life situation, self-determination of life, intact family and partnership and protection of the environment.


Fewer and fewer people believe economic growth gives them a better quality of life. In 2010, 40% shared this opinion. In 2012, that share fell to 35%. 79% of the surveyed were convinced: “growth in the material prosperity of the population can be harmonized with the environment and careful association with resources.”


IS BUSINESS AS USUAL AT THE EXPENSE OF THE FUTURE?


More than 40 years after the first report of the Club of Rome, we are almost halfway to the limits of growth. Since then, these limits were repeatedly tested and redefined.


The finiteness of the planet is an indicative and not an imperative or goal to be realized. Today’s way of life and economic style is at the expense of nature and humankind. As Tim Jackson said, “The prosperity of today is worth nothing if it undermines the conditions for tomorrow’s prosperity.”


PROSPERITY INSTEAD OF GROWTH


Growth as the central goal of the economy is rightly questioned. Initiatives worldwide emphasize prosperity and quality of life


By Georg Feigt


[This article published in Arbeit & Wirtschaft 10/2015 is translated abridged from the German on the Internet.]


In public discussions, a potential means to an end dominates, not the goals: the highest possible gross domestic product (GDP) or its annual increase, better known under the catchword economic growth. Initiatives worldwide now emphasize prosperity and quality of life – and measure them together.


The widespread perception that economic growth no longer improves the living situation of many people stood at the outset of these efforts. This is not surprising considering the conceptual foundations of the GDP. This number only gives information about the surplus value in goods and services created at home. However a real GDP growth need not inevitably lead to increased material prosperity. When the number of residents rises quickly or the share available to people at home shrivels or a larger share of the arising income is used for budget consolidation, the available per capita income of the private households is an indicator that considers these influencing factors. Incomes that arise abroad (above all capital incomes like dividend payouts and interests) are taken into account in addition to the GDP. If income development is compared with the GDP, incomes have increased more slowly, particularly on account of the restrictive budgetary policy in the last 20 years.


DISTRIBUTION QUESTIONS FADED OUT


The household income indicator cannot capture the most important effect of the discrepancy between subjective and objective prosperity development: the increasing- and better documented distribution disparity in the last years whether concerning income, consumption or wealth. With the studies of Thomas Piketty and others, the theoretical and methodological progress in the last years cannot be ignored that contributes to better understanding the connection between economic growth and the concentration of affluence in the form of the wealth of a few. This connection needs more development despite the efforts of Statistics Austria to systematically integrate distribution questions on measuring prosperity and social progress.


Subjective indicators under the heading “quality of life are the second great dimension of worldwide initiatives on measuring prosperity and progress. A gap between the expected and actual growth can occur when material prosperity grows and everyone profits from that. Studies show life satisfaction hardly rises any more after reaching a high level of material prosperity. Leisure time, health or social relations move into the center. These factors are coupled to material prosperity and its distribution. Unequal societies are more unhappy, unhealthy, and socially immobile and so forth. This is also true for individuals. Low incomes reduce life satisfaction, social participation, life expectancy, worsen the state of health and go along with a subjectively higher strain on the environment.


PROSPERITY-ORIENTED POLITICS


Politics should not only be oriented in “more” produced goods and services – with all the negative ecological effects going along with this. Rather politics should concentrate on prosperity and social progress, in other words on a good life for everyone. A better data base at least in Austria was very helpful for this re-orientation. Nevertheless the better data base did not play any role in the political-economic debate.


The reasons for this are manifold but power relations were decisive. Whoever has definitional power over “the problems” to be solved can carry out changes. If expanding production is regarded as the most important problem, sooner or later a policy will be implemented that pretends to reach this goal. Therefore the starting point for an alternative policy must be anchoring the discussion with alternative indicators both discursively and institutionally.


MAGICAL QUADRANGLE


… To create a high sustainable material prosperity and a high quality of life for as many people as possible, institutions are needed that constantly grapple with improvement possibilities and regularly bring recommendations into politics or the broad public.


Instead of a few experts, these new institutions should act with wider civil society participation. Prosperity forecasts and reports are also necessary as the growth orientation is now implicitly reinforced by regular economic forecasts. The task of politics must be to formulate medium-range targets that concretize a prosperity orientation. A reformed “magical quadrangle of economic policy” established 50 years ago and representing a fixed orientation point for a balanced political-economic goal system can serve as a framework.


We stand at the beginning of a political-economic control system – in the debate on social prosperity with consideration of ecological limits. This debate is still marked by a search for the right measuring indicators, definitions and dimensions. A close connection between the technical-statistical studies and the political plane is sought. So the mandate for the Stiglitz-Sen-Fitoussi commission came from the French president Sarkozy at that time. The Enquete commission of the German Bundestag was one of its results. In Austria, Statistics Austria with its project “How are you, Austria” created a statistical basis that led to an annual report. What are still lacking are political actors who develop political initiatives.


NO END-IN-ITSELF


Thus economic growth at best is a means to an end and not an end-in-itself. This realization tends to weaken the economic side and opens up possibilities for a progressive social-ecological policy. A preeminent goal of progressive economic policy is to overcome the existing imbalance in the institutional anchoring of political-economic fundamentals. The international debaters on measuring prosperity and social progress and the studies on their statistical conversion offer good starting points.