Arguments

Is economic growth solving our problems (e.g. unemployment, poverty, environmental degradation) or is it rather the cause of these problems? Whoever is concerned with an absolute reduction of the global resource consumption, will have to face this issue: even though we use resources and energy more efficiently we consume more overall. At the annual meeting of the Club of Rome in Madrid, the outgoing managing director of the IMF (International Monetary Fund) Rodrigo Rato mentioned three serious threats to global economic growth: The instability of the financial markets, climate change, and demographic change.

The possibilities of a qualitative growth are in the center of SERI’s compilation of arguments for “What kind of growth is sustainable?” – an alternative growth which complies with a sustainable development. This means the provision of services and utilities, which increase human well-being, without reducing the capital stock per capita. However, in order to overcome a purely market oriented consideration of economic activities, an approach has to be chosen, which besides real and financial capital also includes natural, human and social capital. An increasing quality of life along with a positive subjective perception of the people should become the focus and the objective of qualitative growth.

The key issues, also discussed in the context of the international conference 2010, are:

Money and the Financial System

Money

In the course of the past few years an insufficiently controlled financial system equipped with wrong incentives has pushed forward a problematic development which resulted first in the financial crisis and finally in the most severe crisis of the real economy since the Second World War. The reaction of most states – to counteract the crisis with public expenses and income reductions – has shown that the costs of combating the crisis are now born by the public.

Growth and resource use

The increased consumption of resources in the industrialised states and in the newly industrialised countries leads the earth to the verge of an ecological disaster. The challenge is to decouple economic activities from resource consumption in order to create an equitably distributed wealth for the people, to protect ecosystems and to reach the climate protection goals.

Social justice and poverty

In spite of progress achieved in some fields the present economic system does not create affluence for all, but rather consolidates existing distribution gaps: At global level but also within individual countries the gap with respect to access to resources, education, labour, assets and income is widening.

Sustainable Production & Consumption

As far as the final consumers are concerned the sustainability of products is playing an increasingly important role. Especially organic or fair trade products, consumer goods with low energy consumption, or consumer goods which are certified according to ecological criteria at the individual levels of the production chain, are more and more frequently put into the shopping basket. So far this development has rather been driven by consumers and enterprises.

Regional aspects

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Regional economic and living environments are of special importance to quality of life and sustainable affluence. Regional strategies can be applied as a counterpoint, as well as complementary to global strategies.

Macroeconomics for Sustainability

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Quantitative economic growth has been considered and is still being considered in many cases to be the central prerequisite of multiplication of wealth, safeguarding of jobs, avoidance of distribution conflicts and the financing of our social security systems. At the same time an exponential production expansion is generating a great number of environmental burdens and can thus reach its natural limits. In the case of potentially lastingly lower growth the question arises how those framework conditions can be changed which make the society and the economy presently so dependent on growth. Under discussion are framework conditions for “Macroeconomics for Sustainability” which are ecologically sustainable and socially equitable and which enable economic stability on the long run.

Quality of Life & Measurement of Prosperity

More and more consumption does not directly lead to more and more quality of life: Especially when the basic economic needs are once met, immaterial values like health, relations and meaningfulness come to the fore. And, after all, the success of a national economy must be measured by the affluence and the quality of life of the citizens. The usual method of measuring economic success is based in principle on one single material parameter expressed by the GDP. Aspects going beyond the pure production success such as quality of life, environmental richness, questions of social assets and distribution, are still not sufficiently taken into consideration.

Work

Gainful work should, to the extent possible, at the same time be safeguarding the existence, high-quality and beneficial to individuals as well as to the society. However, for many people the working conditions are deteriorating and unemployment endangers or impedes the participation in social life.

Governance

Qualitative and sustainable growth requires new ways of policy shaping and constitutes thus always also a “governance reform agenda”. On the basis of the ongoing EU discussion on governance for sustainable development the following questions arise.

Sustainable Management

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Only a sustainable lifestyle can ensure affluence and quality of life also for future generations. The prerequisite for it is a fundamental change of our way of living and managing. Not only are consumers called upon, but also the economy is confronted with a challenge.