Growth imperative
Growth imperative is a term in economic theory regarding a possible necessity of
Current
Meaning and definitions
At the
The discussion on growth imperatives is part of a standing debate over the primacy of
Microeconomic theories
Firms
The first theory of a growth imperative is attributed[5] to Karl Marx. In capitalism, zero growth is not possible, because of the mechanisms of competition and accumulation.[23][24][25]
[T]he development of capitalist production makes it constantly necessary to keep increasing the amount of the capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation.
Therefore, a company's growth is considered necessary to ensure the survival of the company ("grow or die"
On the basis of concepts of
There is also disagreement as to whether these dependencies can be overcome at the company level - provided that this is desired by the owners or the management. Proposals include new management practices, changes in product range, supply chains and distribution channels,
Private households
An imperative for private households to increase their
Another line of argument views certain consumption decisions rather as investments for future growth,[57] but sometimes to increase one's own productivity.[50] Technical products such as vehicles, kitchen appliances or smartphones were used to save time and retain opportunities to earn an income. Over time, these goods would become a necessity, therefore a compulsion to increase one's consumption expenditure could be derived in order to not be left behind technically and economically.[1]
Macroeconomic theories
Political resp. macroeconomic growth imperative
Economic growth has been formulated as an important economic policy goal for decades.[58][59] Examples include the "growth duty" in British legislation,[60] but also the Canadian Jobs and Growth Act, the African Growth and Opportunity Act or the European Stability and Growth Pact of 1997. This has been criticised as politically adhering to a dogma or ideology by some critics of growth.[61][62][63]
The theory of a political growth imperative, on the other hand, argues that economic growth would be necessary to avoid economic or social instability and to retain democratic legitimacy, or to guarantee
As a way out, a redirection of technological development with the help of resource taxes is discussed (
Monetary system and the role of positive interest rates
For a long time,
A second line of argument goes back to Hans Christoph Binswanger , his doctoral student Guido Beltrani,[86] and his son Mathias Binswanger .[87][88] They argue[89] that "a portion of money is constantly removed from circulation" by banks[90] which is mainly responsible for the growth imperative.[91][92] In his book The Growth Spiral (2013), Hans Christoph Binswanger estimated a necessary minimum growth rate to be 1.8 %, while Mathias Binswanger (2009)[92] derived a minimum growth rate of 0.45 %, such that enterprises can still generate profits in the aggregate. In his book Der Wachstumszwang (2019), this minimum rate is lowered to zero as to enable firms to accumulate profits.[93][94]
Other authors criticise the results of Beltrani as well as H. C. and M. Binswanger on the basis that they are based on inconsistent economic models and therefore not valid (→
Those models show how repaid interest is not simply 'removed' from circulation, but flows back into the economy where it can be earned and repeated used to service debts. Models such as those created by Jackson & Victor show that, if no money is accumulated, then all debt can be serviced, and hence that no growth imperative arises from the creation of money as debt, 'per se'. [98] This leads some theorists to conclude that the monetary growth imperative only applies for certain parameters in the consumption function.[29][89][99] They argue that ultimately it is not the interest rate but the savings rate that is decisive for the stability of a stationary economy. If any interest income is consumed in full by the lender, i.e., bank or creditor of the bank, it is available again for repayment. Whether a stationary state can be reached, therefore, depends on the saving decisions of those who earn income or own assets. For zero growth it would only be necessary that savings of some are balanced by consumption out of wealth by others[22][89][95] (→ life-cycle hypothesis). The assumption that banks must retain profits even in a non-growing economy would be unfounded.[89] Accordingly, there would be no grow imperative "inherent" to the monetary system, but zero growth would be impossible as long as actors decide to continuously accumulate financial assets.[100]In
Political demands to overcome growth imperatives
In September 2018, more than 200 scientists asked the European Union to turn away from any growth imperative[104] – a similar demand was raised by the participants of the International Conference on Degrowth[105][106] and the post-growth working group of attac Germany.[107] But even within the post-growth or degrowth movement, the existence of growth imperatives is disputed.[1][29] Among German parties, the demand was included in the political programmes of the Ecological Democratic Party[108] and Alliance 90/The Greens.[109] Green politicians such as Reinhard Loske[110] or Jürgen Trittin[111] call for overcoming growth imperatives. In a dissenting opinion on the final report of the Enquete Commission on Growth, Prosperity and Quality of Life of the German parliament (Bundestag), the experts Michael Müller, Uwe Schneidewind , Ulrich Brand, Norbert Reuter and Martin Jänicke , as well as the members of the Bundestag Hermann E. Ott and the parliamentary group Die Linke, argued that "the question must be answered as to whether progress that is innovative and integrative, socially just and ecologically sustainable is possible without any growth imperative".[112]
Literature
- Binswanger, Hans Christoph (2013). The Growth Spiral: Money, Energy, and Imagination in the Dynamics of the Market Process. Springer. ISBN 978-3-642-31881-8.
- Binswanger, Mathias (2019). Der Wachstumszwang: Warum die Volkswirtschaft immer weiterwachsen muss, selbst wenn wir genug haben. Wiley-CVH. ISBN 978-3-527-50975-1.
- Ferguson, Peter (2019). "The Growth Imperative". Post-growth Politics. Cham: Springer. pp. 75–100. ISBN 978-3-319-78797-8.
- Richters, Oliver; Siemoneit, Andreas (2019). "Technologie, Ressourcenverbrauch und Wachstumszwang". Marktwirtschaft reparieren: Entwurf einer freiheitlichen, gerechten und nachhaltigen Utopie. München: oekom. ISBN 978-3-96238-099-1.
- Richters, Oliver; Siemoneit, Andreas (2019). "Growth imperatives: Substantiating a contested concept". hdl:10419/184870.
This article was translated from Wachstumszwang in the German Wikipedia which is based on:
- Richters, Oliver; Siemoneit, Andreas (February 2019). Wachstumszwang – eine Übersicht (PDF). ZOE. Institut für zukunftsfähige Ökonomien. hdl:10419/201503. CC-BY-SA3.0.
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