Niko Paech: Elements of a post-growth economy

Food for thought:

(thanks to Brian Davey for sending this text)

Dr. Niko Paech:

“the concept of post-growth economics rests on the following premises:

* No ecological uncoupling of economic growth measured in money is in sight.

In an expanding economy, “boomerang effects“ wipe out advances in de-materialisation or ecologisation as result of growing demand. This becomes really dramatic when (well-meaning) sustainability innovations actually trigger additional energy and material flows: Successive waves of modernisation become necessary in order to deal with the unforeseen environmental repercussions of respective foregoing ones. The highly respected studies produced by the Global Carbon Project reveal two important facts: 1. Even during earlier phases which did exhibit a certain uncoupling tendency, the accomplishments were offset by the effect of economic growth to such an extent that global CO2 emissions have increased unrelentingly. 2. Recently the uncoupling tendency again went into reverse: The CO2 intensity of value creation is currently increasing on a global scale!

* An important finding of the so-called “Science of Happiness“ postulates that once a certain level has been reached, an increase in monetary or material wealth no longer contributes to subjective well-being.

Many consumer activities are of a symbolic nature, aimed at social prestige or a feeling of belonging to a specific group or “scene“. Innovations create new offers for material self-portrayal to be picked up by pioneers. If you don’t join in, you’re left behind. Consequently, ever more consumer effort is required to defend one’s social integration. Insofar as the choice of consumer options is literally exploding and there are only 24 hours in a day, the time needed to exhaust consumer options becomes a critical factor. Heaping up possessions stands in contradiction to quality of life.

* Future economic growth is also justified with the need to alleviate poverty and the injustice of unequal distribution.

In place of a conflict-ridden redistribution of existing wealth, it is considered politically more acceptable to boost growth, by which the lot of the needy can be improved without encroaching on the status quo of the well-situated. World reality makes it blatantly obvious that such “peacemaker” logic, by way of which issues of distribution and scarcity are transformed into appeals for growth, has been a failure.

* The economic foundations of growth are being eroded.

Mainstream economists attribute the wealth of societies to the efficiency characteristics (Adam Smith) or the innovativeness (Joseph A. Schumpeter) of systems based on free markets. In so doing, though, they are describing the gear mechanism of the prosperity machine, rather than the fuel it burns. All consumer societies are based on the unlimited and cheap supply of fossil energy. This side of expenditure is now exploding in the wake of increased purchasing power on the part of a global middle class, now expanded by some 1.2 billion so-called “new consumers“ in the emerging economies (China, India, etc.). Even the International Energy Agency (IEA), otherwise criticised for its conservatism, now forecasts an increase in the price of a barrel of crude oil to 200 dollars by the year 2030. What until recently was referred to as “peak oil“ has now turned into “peak everything“. The income side of the northern prosperity model is also beginning to topple. Until now it has been bolstered by an innovation lead which gave it the edge in international competition. As result of investment in the education system, building up modern infrastructures and, last not least, the global mobility of their new middle classes, the emerging economies are increasingly able to conquer new markets – the selfsame markets which via exports have historically financed the consumption of the established industrial nations.”

Part 2:

“An ecologically and socially sustainable economy must be free from all dependency on growth and subsequent pressure for growth, including

– the innovation orientation of modern market economies,

– the present monetary and interest-earning system,

– expectations of high profit,

– external supplies of resources based on a model of global division of labour,

– a culture of unquestioning pursuit of material self-actualisation.

To this we can add a number of conceptual strands capable of enhancing a post-growth economy:

1. Cutting down and slowing down.

Simply exchanging previous patterns of consumption for assumedly more sustainable variants is not enough. Consumer desires should be mitigated so that they can be met by sustainable solutions. The sufficiency strategy addressed here confronts the frenzied quest for further increases in possessions-prosperity and material comfort with a counter question: How can “overfilled“ life styles and ultimately society as a whole be freed from “energy slaves“, consumption and comfort “crutches“? Rather than forgoing something, consumers in danger of drowning in an avalanche of self-actualisation offers – which on top of everything involves time-killing comparison, evaluation and selection – would actually be freeing themselves from superfluous consumption. It also accords with economic logic in the purest sense to rid oneself of any ballast that puts a strain on time, money, space and ecological resources without appreciable returns or benefit.

2. Balance between self-sufficiency and dependency on consumption.

Inability to finance the globalised consumption model leads to social unrest. When the money-making growth machine stalls, prices rise, wages fall, or firms close down, people with a monetary-based dependency on imports and consumption must live in constant fear of becoming “victims of globalisation“. Only supply structures with short distances between consumption and production can be considered as being socially stable. This would entail reactivating skill sets and satisfying needs manually and by virtue of one’s own capabilities with no recourse to commercial markets. By reshaping the division of labour it would be possible to combine self-sufficiency and consumption in such a way that monetary and growth dependency would decrease. Self-work, (urban) subsistence, community gardens, exchange rings, networks of mutual aid, give-away markets, organisations for community use of devices, appliances and tools, etc., would contribute towards gradual de-globalisation.

3. Regional economy.

Many needs could be met by means of regional markets, shortened supply chains entailing concepts like Community Supported Agriculture (CSA). Regional currencies could ensure that purchasing power stays in the region, bringing about an uncoupling from globalised transactions. In this way it would be possible to retain the efficiency advantages accruing from a money-based division of labour, but now within an ecologically viable and more crisis-resistant framework.

4. Material zero-sum game.

Consumer desires which cannot be substituted by “cutting down“ or creating local/regional supply structures could continue to be met within the framework of the global consumption model. Corresponding products and infrastructures could be optimised, opening up hitherto untapped possibilities for lengthening product life cycles or intensifying their use to such an extent that value could be created with no need for extra material production, resulting in a “material zero-sum game“. Only in the event that these strategies prove to be insufficient would the need arise to apply the efficiency and consistency strategies favoured by mainstream sustainability research.

5. Institutional innovations.

Finally, two framework conditions need to be satisfied; namely, on the one hand, a land and monetary reform to mitigate the pressure for growth inherent in the system. For instance, the regional currencies mentioned in the foregoing could be backed by a negative interest or a demurrage charge. On the other hand, the long overdue introduction of a system to assess, attribute and cap environmental burdens so that the broad sustainability concept is concretised by personal CO2 accounts. Everybody would have the right to the same annual emissions quota (approx. 2-4 tons), which would, though, be negotiable. The sum of all quotas would not be allowed to exceed the highest permissible total environmental burden compatible with the two-degree climate protection goal. Markets, entrepreneurs, money, consumer goods and technological innovations would still be necessary in a post-growth economy – but far from a culture of exorbitance. It is the size of the dose that makes it poisonous. The economy is no different.”

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