FondsGoetheanum: Economy growth

Economic life is hard. Rethinking is urgent.

Associative economic research observes and considers phenomena in their entire context. It explores, befriends and supports new possibilities for economic forms and markets that are more humane and peace-promoting.
In this issue you will find a number of promising approaches and examples of successful applications.
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The misconception of boundless growth

A healthy economy must grow. Growth is necessary for the economy’s healthy functioning. This is claimed a priori in most accepted economic models. But the reality is that the world in which the economy unfolds is not infinite; it is limited.

Our earth offers considerable space. However, it is limited. For a long time this fact could be neglected. There was still plenty of room to open up. This is one of the reasons why economic behaviour and economic theories are still conceived in terms of boundless growth. This, despite the fact that the natural environment had reached its limits of resilience in the 1960s, requiring us already then to recognise the finiteness of raw materials and to curb our waste and pollution of soil, air and water.

Our planet has limits – the same applies to economic life.

Growth – the magic word

For economics, growth remains the magic word; awareness of limits is missing. The great wars of the twentieth century allowed this reality to be forgotten, especially since 1945: there was so much destruction that the need for reconstruction overlaid all else. After that, came the growth of the North at the expense of the South. Later, and to this day, the illusion of growth has been sustained by government debt. On closer inspection, however, the worldwide drive for growth is one of the most important causes of social unrest, misery and war.

New thinking is needed

Today’s economic concepts must be re-considered and adapted to our limited economic space. The laws of an open, growing system are quite different to those of a stationary, closed one. We can observe this with a stone thrown into a lake, producing waves that move away infinitely. But if the stone is thrown into a closed space – a round well, for example – we observe another phenomenon: when the wave reaches the edge, it stops moving and only goes up or down. The same applies to the economy. A closed environment, requires a different kind of regulation: growth must be rethought.

Re-thinking growth.

Two types of growth

We need to distinguish between two types of economic growth. One is connected to human activity, work. We either work on nature or increase the efficiency of our work by organizing it better or inventing machines. The other takes place without work, through the possibility that money increases by itself.
These two forms of growth are in competition with each other in the limited space available. Because of their very different growth rates, those who depend for their income on working are getting poorer, and those who get their income from ‘money business’ are becoming richer: a worldwide fact which has now been recognized and acknowledged for over thirty years.
However, it is inconceivable to limit growth based on human labour. For that would mean to obstruct human creativity, and ultimately to lose our humanity altogether. One of the most remarkable human qualities is that we all want to improve what we are committed to. This is an important civilizing element, which inevitably entails growth and acts as a constant spring in economic life. It is therefore impossible to limit the growth resulting from human labour.

Create a hole in the realm of money

If we do not want to suffocate under the burden of too many values for the limited space in which we live, we must tackle the other kind of growth – that of money. How so? By inverting it and creating a sink in the money sector, so that mere monetary values are able gradually to disappear – for example, as with the Swiss National Bank’s introduction of negative interest rates.
If we want to prevent the necessary using up of values by way of sudden crises, destruction and war, there is hardly any other way. Without the deliberate introduction of a gradual shrinkage of otherwise stored up monetary values, the economy cannot recover again – neither globally nor locally. This concerns our future. Even more, it is about the possibility of living in peace.

Marc Desaules