In times of global economic and financial crisis, new economic concepts are more in demand than ever. Adjunct professor Niko Paech, originator of the concept of the post-growth economy, puts forward some interesting solutions.
Growth equals prosperity. For decades this equation was considered beyond dispute by those working in the field of economic sciences. But since the onset of the financial crisis in 2008, it is not just the financial markets that have reached their limits; so, too, have the economic theories. We spoke with Niko Paech, adjunct Professor at the Carl von Ossietzky University’s Chair of Production and Environment in Oldenburg, who developed the concept of the post-growth economy.
Mr Paech, why is this root-and-branch rethink necessary?
Niko Paech: The need to radically alter our lifestyle and economy has become essential because we are dependent on a few key resources that are in danger of running out. In 2008 we saw the price of a barrel of crude oil reach historic highs. These price increases undoubtedly had an impact on the course of the global economic crisis, which began as a financial crisis in late 2008. We are also dependent on land. The German way of life requires more land than the country has available within its borders. Metals and rare earth elements are also fast becoming depleted and expensive. And the situation is set to escalate, since the proportion of advanced electronics and telecommunications and information technology that contributed to the last phases of economic growth was incisive. And yet precisely these supposed ‘smart’ product categories, as well as the many so-called green innovations – such as wind turbines, hybrid vehicles etc. – are dependent on scarce resources. The scramble for mining and production sites already resembles the early stages of a cold war.
The resulting increase in resource prices has a knock-on effect on the price of consumer goods and therefore reduces purchasing power in modern consumer societies. All goods become more expensive, even those one might not expect to be affected. Our value chains, which ultimately create the products and services that define our prosperity, have become so complex and their boundaries so blurred that even a glass of mineral water is dependent on land and crude oil.
What will happen when we no longer have enough crude oil? What sort of image do you have in your mind’s eye?
Niko Paech: Perhaps there will be new wars. But it may also be that a steady loss of purchasing power will mean we are forced to practise alternative supply chain strategies beyond an industry devoid of boundaries and therefore irretrievable. Then we would be approaching a post-growth economy, in which the local and regional economies – in particular, creative self-sufficiency or subsistence – play a role. For this transition to take place democratically and in a spirit of solidarity, we must explore new practices of moderate consumption and corresponding lifestyles as soon as possible – and not when it is already too late. Only in this way can we socially cushion the collapse of entire industrial sectors, if peak oil were to escalate, for example. We are our own last resort. In addition to freeing ourselves from material excesses and the introduction of subsistence practices, this would include consigning to the scrapheap of history the myth of the 40-hour week.
Let me illustrate this using the nuclear disaster at Fukushima as an example. In the confusion that followed, a certain Japanese supplier to the German automotive industry was temporarily unable to deliver on time a small motor required for windscreen wiper systems. As a consequence, the German production lines came to a standstill – and all because one upstream product – out of the many that go into building a car – was missing. If, as a result, a big company with a workforce of thousands suddenly experiences a loss in turnover and these employees stand to lose their jobs or at the very least a drop in salary, there are bound to be serious knock-on effects. For these people are also consumers in countless other markets. They will travel less, make savings on food and cut down on other outgoings ...
This economic spill-over shows the fragility and vulnerability of a prosperity model built on a complex division of labour where spatial barriers have been removed. And the dilemma is this: contemporary consumer and mobility prosperity is unthinkable without precisely this industrial specialisation. That’s why there is only one solution, namely a form of supply chain management that is moderate, selectively re-localised and therefore more stable – like the one linked to my proposed post-growth economy.
Could you perhaps outline for us the basic pillars of the post-growth economy?
Niko Peach: In its simplest terms, two approaches are necessary initially: namely a period of downscaling, in other words sufficiency; and secondly a new balance between self-provision and external supply, in other words, subsistence. The sufficiency strategy turns on its head the modern principle of striving to increase one’s material wealth. Why do we not see cuts and downscaling as positive achievements? We might discover many forms of energy slaves, comfort aids and infrastructure elements we can do without – whether these are in the form of electrical kitchen appliances, wellness prescriptions, air travel or industrial plants. We should rid our everyday lives and society in general of such encumbrances. That way we would save time, money, space and ecological resources. Let us get rid of the proliferation of rubbish that signals our affluence and clogs up our lives.
The second approach is to do with overcoming our slavish dependence on monetary-based external provision. What is needed here is the work of the individual – but on a contemporary scale. Those who work without remuneration for themselves and their immediate social environment kill three birds with one stone. First, this is the best protection against future resource shortages (peak oil, peak everything), which make the current prosperity model unaffordable; secondly, we make a direct contribution to protecting the environment; and thirdly, we structurally alleviate the growth pressures inherent in a monetary-based industrial model that is founded on task sharing. First of all, though, it is time to ring in a period of downscaling.
In other words, we’re really talking here about austerity. How do you sell that to the broad masses in a society?
Niko Paech: On the question of austerity, let me say this: we have no objective yardstick to measure whether the reduction of one’s personal desire for material self-realisation through renunciation can be equated to the benefits gained from abandoning such excesses. It is simply a matter of interpretation – or at least it is beyond a level of consumption that covers all basic comforts. We’re not talking here about Africa, but about the situation in Europe. Acceptance of reduction results from social interaction and the continuity of personal experience. Look at it this way: if I get used to receiving a steadily increasing mountain of presents each Christmas and then suddenly one year I find only half the expected number under the tree, that will seem like austerity. But if I had always lived in a world in which this half-sized mountain of presents was the norm, I would not even be capable of feeling austerity.
Nevertheless, I don’t think it is possible to make the broad masses radically reduce their demands and consumption habits. It is sufficient in the first instance to make contact with an elite of pioneers, an avant-garde, which in turn will pass on and circulate the social practices it establishes to its immediate social environment. We refer to this as social diffusion, in other words the spread of new practices and lifestyle models. The only thing I can do as a scientist – and therefore as a sustainability communicator – is to help this avant-garde deliver theories and contexts which demonstrate that what they are practising is not mere romanticism or strict moral self-denial, but pure serenity, transcendence and perhaps even enjoyment of life. ‘Cool’ will be defined in future not as the person constantly open to attack on account of excessive lifestyle demands, but the person who has no need for the pomp of degenerate affluence, the person who is free.
A question for the community
How do you evaluate the concept of the post-growth economy from the perspective of your country and your social environment? Join in the discussion on sustainable economic management and post-growth economy with the Climate Change and Related Issues group!
Interview: Mirjam Leuze