“We're all aboard the Titanic”

an interview with Federico Demaria

Guilt (Issue II/2019)

Mr. Demaria, for some time you have been calling on the European Union to dismiss its traditional growth model and start an open debate about alternative development strategies. Most recently, you even spoke in front of members of the European Parliament. What irks you about the economic policy of the EU?

What bothers me most is that the EU has been persuading people for decades that the growth-based economy is the panacea for all of our problems – for poverty, unemployment and a lack of sustainability.

And you contradict that ...

... decidedly! In fact, the opposite is true: the growth dogma has only further fueled humanity's problems in the recent past. Take unemployment as an example: the proponents of the growth model like to claim that growth creates more jobs and thus counteracts poverty and inequality. At present, however, a different phenomenon can be observed in the US and Europe: the economy is growing, but there are only a few new jobs. And when jobs are really created, these are low-paid jobs under the most precarious conditions. The only thing that's increasing is the number of low-paid and temporary workers – and the level of inequality. Because only the top earners really benefit from growth.

Nevertheless, the expansion of the world economy over the past 25 years has led to a reduction in global poverty. Or would you deny that?

No, I would not, even if you can see the corresponding statistics of the World Bank quite critical. But the question remains: is the growth model the answer to the questions of our time? I think you have to have big doubts about that. The already mentioned aspect of increasing inequality is only one argument. A second point is sustainability, which is of particular importance to me as an environmental economist. I ask you, can a system based on growth be sustainable?

If I were on the side of growth advocates, my answer would probably be: Yes, if it becomes more effective at the same time ...

... and theoretically that would be correct. In practice, however, growth and sustainability cannot yet be reconciled. When an economy grows, it inevitably consumes more fossil fuels and more concrete, more wood, more steel. It may become more effective over time, meaning that it spends less energy and less raw materials for one percent of GDP growth than before. The bottom line, however, are not the relative but the absolute consumption figures – and these are on a steady rise. There’s no trace of sustainability. And while we are already on the subject: Even our growth itself is anything but sustainable. In the past few years, we had to more or less obtain it by fraud in the European Union, for example.

How so?

The European Central Bank (ECB) has pursued a monetary policy of quantitative easing. It has bought bonds from indebted countries to stabilize euro area economic growth. Only now, when these measures are slowly being scaled back, will we see how stable the European economy really is.

To what extent would the “post-growth economics” you propose work better?

At first, there would need to be the common understanding that we have to stop our religious worship of economic growth – because it is nothing but a kind of religious fanaticism, if we continue to believe in something that works only half as good as we think. If, for example, the EU's goal is to reduce inequality and promote a sustainable economy, why is growth always at the top of the agenda? Why don’t we focus on the issues themselves? That seems like a rather unnecessary detour. In a post-growth economy, the important issues would take precedence – and there would be more creative solutions to our problems.

What would these solutions look like in detail?

Let us take the example of the labor market again: instead of constantly praying the mantra of creating new jobs through national and global growth, it would make much more sense to promote concepts such as the reduction of working hours and the division of labor. Workers would not work fifty hours a week and thereby we would pave the way for new part-time jobs. Working hours would be reduced and more people would have a job. In addition, one should not only deal with ideas such as the unconditional basic income, but also with salary caps. In the United States of the 1950s, for example, top earners – those with annual incomes of more than 1 million US-dollars – sometimes faced income taxes of ninety percent.

Neoliberals would probably dismiss your vision of a post-growth economy as a socialist utopia ...

I have to live with that. The neo-liberals, such as Emmanuel Macron in France, and the right-wing movements in Hungary and elsewhere, agree in one very important aspect: They do not tolerate alternative economic models. They uphold the status quo. That's where the job of economists like me starts. We have to succeed in developing realistic alternatives. And if these counter-concepts are to survive without growth, then it is clear that they need other driving forces. I would never be so blind as to claim that everything will automatically be fine if we can only overcome the growth dogma. No, the redistribution of wealth will also play a major role in the future when it comes to boosting economies.

Will you be able to convince those responsible in Brussels of such projects?

I believe that one has to do much less persuasion than it might be assumed. In the autumn of last year, I participated in a post-growth conference organized by Members of the European Parliament. Behind closed doors, a representative from ECOFIN, the European Economic and Financial Council, told me and my colleagues: “You know, we are not stupid. Everyone knows that economic growth alone will not save us. But nobody knows how to change course!” In a way, we're all aboard the Titanic. We see that we are on a collision course, but it seems almost impossible to change direction in time.

Are you convinced that we can still change course somehow?

I have not given up hope yet. I have been working on post-growth for some twenty years now and the public debate has changed a lot for the better since my early days. Although I do not know if I will personally witness the final turn in economic policy, at least I would like to be able to tell my children at some point: I have tried to change the system.

an interview by Kai Schnier

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