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Against Growth Mania and Fair Redistribution

How can we rebuild our society so we manage with less growth and not collapse when growth does not occur? Consumption beyond a certain level that we all need is pathological, a compensation or substitute for missed life (cf. Erich Fromm). A moderate increase of the top tax rate could signal that we all sit in the same boat.

Sustainability Researcher on Necessary Social Change: Reinhard Loske Interview

[This interview published in September 2012 is translated from the German on the Internet,  http://www.dradio.de/dkultur/sendungen/interview/1880624/.]

[The growth rates in industrial states will decline "as certainly as the Amen is spoken in the church," says Reinhard Loske, chairperson of the study group for global future questions. He criticizes the fixation of politics on growth stimulation and growth acceleration. On the other hand, new life forms like social housing and car sharing are encouraging developments.]

Dradio: For decades, growth was the credo of the economy and politics. Prosperity and quality of life grow through growth according to the dominant view. However doubt is spreading about perpetual growth. The report of the "Club of Rome" on the limits of growth is 40 years old. People are now beginning to speak about a post-growth economy and an economy beyond growth. Reinhard Loske did this for a long time; he was environmental senator in Bremen and a Green politician. In 2010, his essay "Farewell to Growth Pressure" sparked off a controversial debate. In 2012, his book on the growth question "Wie weiter mut der Wachstumspiral" (Can the Growth Spiral Continue?) was published. Good morning, Mr. Loske!

Reinhard Loske: Good morning to you!

Dradio: How do you see this? Who now has the majority in the debates - the growth believers or those who reflect on an economy beyond growth?

Loske: Very crude growth believers are rarer even if they obviously still determine politics and the opinions of economic associations and others to a great extent. On the other side, there is a vigorous multi-faceted debate. The friends of green growth say the whole must only be made green. They everything can remain as it is. However there is also a strong movement, the so-called post-growth society, which is gaining increased recognition and approval. In the post-growth society, people reflect how we can rebuild our society so we manage with less growth and do not collapse when growth fails to arrive.

Dradio: You spoke of the Green Economy, Green Growth and the New Green Deal. You are not a fan of that movement. According to its theory, the pressing problems of humanity like climate change and hunger can be solved with technical means and new growth could then occur with these new technologies. Why do you disagree with this theory?

Loske: Firstly, technical change will obviously occur. Reconfiguring our energy system to renewable energy, energy efficiency, energy savings et cetera is an urgently important presupposition but not a sufficient presupposition. We need social innovation and cultural change at least as much. Two things may not be forgotten with this technological orientation. Green growth is emphasized alongside shriveling. That we don't know what the effect will be on the gross domestic product, how we should measure and whether alternative measurements can be developed is often forgotten in these discussions. The second is what economists call the rebound-effect. I call this the hare and hedgehog race, in other words we lose through growth effects what we win on the efficiency front through technical progress. We have more economical cars but more and more of them. We have more economical electrical equipment but more and more electrical applications. This list could easily be continued. Resource consumption remains at a high level despite technical progress. That is the problem on the world scale and also increasingly in industrial countries.

Dradio: The whole analysis must be expanded by new forms of social change and cultural change. What does this mean concretely?

Loske: Two sources supported the growth debate of the 1970s. One was the ecological limits of growth as you mentioned. But there was also a cultural growth criticism. In the famous book by Erich Fromm "Having or Being" (Haben oder Sein), the thesis was propounded that consumption beyond a certain level that we all need is pathological, that is a compensation or substitute for missed life. When we analyze these debates of the 1970s and compare them with today's debate, one difference is clear. The 1970s had a slightly culture-pessimistic pitch, I would say, while today's debate is strongly marked by social innovations. Making things is a very important theme: from car-sharing and communal dwellings to urban gardens, care for common goods, energy cooperatives and component exchanges. An incredibly lively development is occurring. The emphasis is on human development, not on green growth - in transition towns, cities in change, maintenance of the commons and social human goods. That is the difference.

Dradio: Why is it so hard for politics to set limits? Is it because the necessary new economy is still associated with renunciation and renunciation will not get you very far?

Loske: Yes, that is certainly true. Many became burnt children through the debates of the 1970s. Later through the eco-tax, people became renunciation apostles, spoil-sports or enemies of technology who want us to decry progress. In truth this is a new debate on progress. When you look at the many social innovations that are often coupled with technical innovations, this is a both-and and not an either-or. Politics depends very much on growth stimulation or growth acceleration. Things or facts can be turned upside down. We will have a declining rate of growth. This is as certain as the Amen in the church, we could say ironically following a famous Marx quotation. Therefore we would do well to prepare for this new situation and become quasi-independent of growth.

Dradio: Many thanks former Bremen environmental senator Reinhard Loske for your ideas on the limits of growth and necessary social change.


By Claus Peter Ortlieb

[This article "Linkskeynesianischer Wunschpunsch" published in: Konkret 9/12 is translated from the German on the Internet,  http://www.exit-online.org/druck.php?tabelle=autoren&posnr=510.]

A "Fair Redistribution" alliance (Umfairteilen) calls for a German day of action on September 29, 2012: "There is a way out of the economic and financial crisis: Redistribution! We don't want public and social services to deteriorate and the large majority of the population to be overly burdened. Instead oversized wealth and financial speculation must be taxed at last. Lived solidarity in our society is central, not only money." A property tax and a one-time property fee are necessary to justly finance "necessary public and social spending and reduce indebtedness" and "wage the battle against tax evasion and tax havens and for a tax on financial market transactions, against speculation and against poverty worldwide."

Parts of the SPD and the Greens welcome the campaign and point to their own programs according to which the top tax rate should be raised from the current 42 to 49 percent. They diligently conceal that they were responsible for lowering the rate from 53 percent in the 1990s to the current percentage. Since both parties supported the incorporation of the debt brake in the German basic law and the austerity policy of the Merkel-government, only symbolic policy can be expected from a potential Red-Green government after 2013. A moderate increase of the top tax rate could signal that "we all" sit in the same boat. The next pension cut could be sold better if "those at the top" contributed their mite.

"Fair redistribution" advocates are more serious. Attac urges a progressively graduated property fee for millionaires and billionaires skimming off 50 percent of their assets and redirecting the funds into the public treasuries. Four trillion Euros could be recovered all across Europe. Apart from that, restoring the income- and assets-redistribution of the 1970s together with the fiscal instruments is necessary for rescue from the present crisis. We want our Rhine capitalism back again!

The explanation of crises underlying these demands is surpassed in simplicity by the German mainstream and its chancellor who are oriented in the neoclassical model of the "Schwabian housewife." Because "we all," particularly "our South," lived beyond our means, savings and austerity are now annou9nced. That this policy only leads deeper into crisis has been known since the Bruening emergency decrees and doesn't need to be discussed further here.

On the other hand, the left-Keynesian model advocated by Attac and others sees the cause and the crisis-laden developments in the unequal distribution of income and assets. Neoliberalism pulled us from the right way of "good capitalism" and led into crisis.

The crisis theory already formulated by Robert Kurz in 1986 is in contrast to that model (see Konkret 2/2012). As emphasized by Marx, capital is a self-contradiction in that on one side it is based on labor as the only source of its abstract wealth and on the other side human labor power is removed more and more from the production process with growing productivity. Marx prophesied that this contradiction would "blow up" the narrow-minded foundation of capital. There is some evidence that capitalism entered into this final phase theoretically anticipated by Marx since the 1970s with the application of microelectronics whose automation potentials are still not exhausted.

The chain of financial crises of the last 30 years that first assumed global dimensions with the crash of 2008 had their starting point in the so-called "stagflation" of the 1970s, in the simultaneous global economic stagnation and high double-digit inflation rates. The Keynesian economic policy still indisputable worldwide at that time could curb the crisis phenomena but was no longer able to generate a new self-sustaining accumulation. It broke down according to general perception and its own claims and was superseded by neoliberalism.

Neoliberalism's answer to the missing possibility of adequate real surplus value production consisted in ensuring profits in other ways. Firstly, it enabled increasing unemployment to exert pressure on wages. Secondly, taxes for businesses and capital gains were lowered in the course of the so-called "supply orientation." Thirdly, many businesses for lack of real investment possibilities fell back to the credit system, participated with their money capital in generating financial bubbles and embellished their balance sheets in this way. In the 1990s, the Siemens firm was mockingly called a bank with an allied electronic division.

Phenomenologically Attac and others are completely right. On one side, real wages fell, around 4 percent in Germany within 8 years thanks to Agenda 2010 and even more in the developing low-wage sector. On the other side, financial- and investment assets grew globally twenty-fold - because of the deregulation of the financial sector without producing any corresponding real assets.

Here is the problem. These assets are in large part fictional, arose through financial bubbles or were based on rotten credits. Any attempt to transform it on a large scale into material riches would lead to its immediate devaluation. This would have the consequence of the one-time fee demanded by Attac with which half of these assets could be collected. The idea that enough money exists and only needs to be distributed differently is too simple like the idea of simply printing the necessary quantity of banknotes.

The call to return to the "good capitalism" of the 1970s as to income- and assets-distribution is unreal or unrealistic. The neoliberal revolution wasn't a mere mistake or misunderstanding but an inner-capitalist answer to the crisis of the 1970s and the failure of Keynesianism. The crisis was not overcome, only delayed and intensified. A return to the starting point is not possible. The conditions for surplus value production have deteriorated through the productivity growth attained since then.

No one can be stopped from expressing wishes. But the presuppositions for realizing wishes should be explained better. Realizing the ideal of "fair redistribution" is no longer possible under capitalist conditions.

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