The Contested Concept of Growth Imperatives: Technology and the Fear of Stagnation

Oldenburg Discussion Papers in Economics The contested concept of growth imperatives: Technology and the fear of stagnation Oliver Richters Andreas Siemoneit V – 414-18 November 2018 Department of Economics University of Oldenburg, D-26111 Oldenburg Oldenburg Discussion Papers in Economics V-414-18, November 2018 The contested concept of growth imperatives: Technology and the fear of stagnation Oliver Richtersa, Andreas Siemoneitb a International Economics, Department of Economics, Carl von Ossietzky University of Oldenburg, Ammerländer Heerstraße 114–8, 26129 Oldenburg (Oldb), Germany, [email protected]; b ZOE. Institute for future-fit economies, Thomas-Mann-Str. 36, 53111 Bonn, Germany. Abstract: Economic growth has become a prominent political goal worldwide, despite its severe conflicts with ecological sustainability. Are ‘growth policies’ only a question of political or individual will, or do ‘growth imperatives’ exist that make them ‘in- escapable’? We structure the debate along two dimensions: (a) degree of coerciveness between free will and coercion, and (b) types of agents affected. Carefully derived micro level definitions of ‘social coercion’ and ‘growth imperative’ are used to discuss several mechanisms which are suspected to make economic growth necessary for firms, households, and nation states. We identify technological innovations as a systematic necessity to net invest, trapping firms and households in a positive feedback loop to increase efficiency. Due to its resource consumption, the competitive advantage of a novel technology is often based on a violation of the meritocratic principle. The resulting dilemma between ‘technological unemployment’ and the social necessity of high employment can explain why states ‘must’ foster economic growth. Politically, we suggest market compliant institutions to limit resource consumption and redistribute economic rents. Keywords: economic growth; social coercion; growth imperative; technology; resource consumption; unemployment. JEL: D11; D13; E22; O44; P10; P12; P18; Q01; Z13. Lizenz / Licence: Creative Commons BY-NC-ND 4.0. creativecommons.org/licenses/by-nc-nd/4.0 2 Richters / Siemoneit: The contested concept of growth imperatives: Technology and the fear of stagnation 1 Introduction (1) A ‘drive’ (or ‘motive’) from left to right that ranges from free will over socio-cultural and economic influences Economic growth has become a prominent political goal to direct coercion (force). We have named five points along worldwide (Schmelzer, 2015, pp. 262–70). Critics question this dimension which has three aspects that are further ex- the ability of growing economies to stay within “planetary plained in figure 2: (a) Coerciveness increases from zero boundaries” (Bergh and Kallis, 2012; Steffen et al., 2015), or on the left to full scale on the right. (b) The points differ in they argue that growth should be replaced by new objectives their external influence: Free will and conformity are based because it has ceased to improve social conditions in indus- mainly on individual mental attitudes, deliberately chosen trialized countries (Kubiszewski et al., 2013; Stiglitz et al., or culturally acquired. Direct coercion as maximum external 2010; Wilkinson and Pickett, 2009). Even proponents of influence is hypothetical in our context, as no individually growth suspect that it may become obsolete because of “sec- enforced ‘growth law’ has been observed (though national ular stagnation” (Blanchard et al., 2016; Teulings and Bald- laws may require regulators not to impede economic growth, win, 2014). These concerns raise the question of whether such as the UK ‘growth duty’, UK Public General Acts, non-growing economies can be stabilized, or: “Why is there 2015). In between, we find ‘social’ as a mode of interaction so much of a political need for growth?” (Rajan, 2016, (cf. section 2.2), and we distinguish between social pressures p. 270). Discussions about this alleged need for growth de- and social coercions, the difference being existential threat. liver answers between free will and coercive laws, with very We will argue that a social coercion must be existential to different reasonings (cf. section 2). be ‘truly’ coercive, therefore the focus of the article is on This article investigates whether growth imperatives exist, the dotted frame. (c) We will show a general tendency for i. e., system immanent mechanisms that require economic ‘coercive’ arguments to be based on economic instead of growth and are hard to circumvent for individuals, firms, or socio-cultural pressures. Towards the right edge of our fig- nation states. In section 2, we structure the debate on growth ures, the economic mode of pressure gains in importance (cf. imperatives in a matrix with two dimensions, coerciveness section 4.1). and type of agent, thereby identifying two questions: (2) The second dimension is a ‘scope’ from bottom to (i) What makes economic growth ‘imperative’ (coercive)? top that considers how three different classes of agents are We regard growth imperatives as a special case of social affected by growth imperatives: firms and households at the coercion. For both terms, formal definitions are delivered micro level, and public decision-makers at the macro level. in section 2 that are currently missing. This will lead us to We will argue that genuine (economic) growth imperatives focusing on economic conditions rather than considering (“causes”) can only be found at the micro level of firms and socio-cultural influences. households, even though it translates into a political growth (ii) Which agents are subject to this coercion according imperative (“symptoms”) via an agent-policy link. to which mechanisms, and is the concept of a growth im- Figure 3 visualizes these questions and the content of the perative likewise applicable at the micro and macro level? article sections. Section 3 scrutinizes theories of growth imperatives for firms and describes how technological progress requires steady 2.2 Social Pressure and Social Coercion increases in efficiency and therefore net investment. The availability of natural resources plays a key role in fueling Coercion is usually discussed as a relation between two indi- an economic arms race. In section 4, we will show how vidual agents, coercer and coercee (cf. Anderson, 2015). The technical consumption goods that make private life more ef- coercer can be ‘society’, when individuals are “compelled ficient become existential necessities for households. This is [...] by situational circumstances, that is by the structure of crucial for closing a positive feedback loop between supply society and not by individuals” (Abercrombie et al., 1984, and demand. We will explain in section 5 how the growth p. 45) or “placed under enormous social pressures” (Sulli- imperatives of the economic agents proper translate into a van, 2009, p. 81). However, there is no shared definition political growth imperative for governments, because cer- of ‘social coercion’ or ‘societal coercion’. Both terms ap- tain collective convictions and political restrictions make pear with a wide range of meanings in the literature, from alternatives to fostering economic growth ‘unrealistic’. We internalized social norms (role expectations and ‘duties’, de- discuss institutional remedies for addressing this dilemma. cency, bad conscience, e. g., Yllo, 1990), social approval and Section 6 concludes. disapproval (peer pressure, public opinion, e. g., McDermott, 2017) to institutionalized force (laws, military service, com- pulsory education, referral to psychiatry, e. g., Anckarsäter, 2 Structuring the Debate 2010). To make social coercion a meaningful analytical 2.1 Reasons for Economic Growth: Between Free term, we derive a more narrow definition (cf. figure 3). Will and Direct Coercion The word ‘coercion’ suggests a lack of alternative. There are cases with no alternative in any sense, such as basic To structure the debate on growth imperatives, we arranged human needs. We call it a top-level constraint on human related quotes along two dimensions (figure 1): behavior to ensure a minimum of calories, clothing, dwelling 3 Richters / Siemoneit: The contested concept of growth imperatives: Technology and the fear of stagnation free will social conformity social pressure social coercion direct coercion (autonomous) (internalized) (not existential) (existential) (force) planning Cold War system technocratic euphoria [1] rivalry [1] stability [2] macro: optimism [1] skyrocketing nation symbol of international unemployment [3] states / ideology [5] national power [1] competition [1] policy subservience [4] makers paradigm holy grail [6] or mindset [7] social crisis [1] expand-or-die [8] fetish [9] growth for market growth’s sake [1] leader, iron force [11] (not observed) No.1 [10] external coercive micro: protestant laws [14] firms work ethic [12] compulsion to matter of accumulate [13] grow or die [17] taste [15] obsession [16] rat race at the standard shrinking [20] social level [19] micro: of living [18] house- eccentric mental stigmati- social death [24] holds decisions [21] infrastructure [22] zation [23] loss of newly created keeping up with iron cage of income [28] wants [25] the Joneses [26] consumerism [27] Figure 1: Quotes related to economic growth and its contested ‘necessity’. The two dimensions are ‘drive’ (or ‘motive’) from left to right, and ‘scope’ from bottom to top. From their context, the quotes (though not the wording alone) can be attributed to coerciveness and one of the agent types

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