Background - 26.11.2024 - 08:00
Rethinking Growth – a necessity in our times
On 21 November, for the 22nd time, doctoral students and postdoctoral researchers at the University of St.Gallen (HSG) organised the annual DocNet Symposium. Reto Föllmi, Professor of Economics and Vice-President at HSG welcomed over 200 participants at SQUARE. "You are the motors of innovation", he addressed the students and researchers. "I’m looking forward to your ideas for making this world better.” Journalist Ulrike Herrmann was first to take the stage. She rejects the idea of "green growth” that counts on technology to solve the climate crisis. "It won’t work because we will not have enough green energy to power a growing economy." To make her point she described some issues of the energy transition such as the stochastic nature of renewable energies and the lack of storage capacities for electricity. "The core of capitalism is the use of energy. If we cannot power the machines, that is the end of capitalism. However, it’s not the end of humanity." She advocated for sufficiency by drawing an analogy to the British war economy of 1939: "They shrunk the economy to produce enough weapons for the war.” The production of other goods was curtailed, they were rationed and distributed evenly. "In a shrinking economy you need government planning to ensure that some people don’t end up with nothing.”
Exciting times to study economics
From HEC Lausanne, Timothée Parrique joined online. According to his observations, it is very rare that countries increase their GDP without adverse ecological effects. "Progress is badly measured by GDP. We should focus on the increase in quality of life.” What needs to be done? Business schools should adjust curricula and allow for more diversity. "Today’s business students will advise companies and governments in situations of crisis. We need to make sure they don’t end up as narrow-minded economists who just look at GDP.” Students, scientists and decisions-makers should try new things: "The economy is not a Jenga tower that falls apart if you touch something. It’s an exciting time to study economics. We should do it boldly and with creativity,” he said.
Professor Mathias Binswanger gave a short lecture on the history and mechanism of modern economics. "Until the 19th century there was no growth in the sense of GDP per capita.” This only started with industrialization when capital replaced land as the main factor of production. Since then, growth is imperative: "We live in monetary economies where companies must make profits or disappear. To do so, they need an inflow of money for investments to increase production.” Successful economies are typically characterised by an increase money supply and GDP growth. Agnes Jezler from Greenpeace Switzerland referred to HSG as "one of the most exciting places to have these discussions.” She believes that it’s time for a paradigm change. "Green growth has had its chance and its time for it to step aside.” Economists are called upon in times of crisis: "People and media are looking to you for guidance. The impact you have depends on the questions you ask, on what you teach and the models you research.”
Getting back in the driver seat
Getting back in the driver seat
"As the population increases, we need some type of growth”, said EPFL professor Dominique Foray. "But we need to focus on the right combination of market instruments, technologies and social norms. We are good in changing technologies but it’s more difficult with social norms or consumption pattern.” "We probably live better than ever before”, said Matthias Binswanger. "People don’t want to experiment and endanger this.” This leads to a schizophrenic situation where we talk about change but act otherwise. "100 years ago, the economy was driven by our needs. Today we don’t believe in more happiness through more consumption, but we do it because we fear that the system will collapse otherwise. The system drives us, we don’t drive the system anymore.” But not only producers and consumers play a crucial role in changing the economy, as asset manager Jürg Rimle pointed out: "There is a common responsibility between investors and asset owners. We need to rethink what we want to achieve with our investments.”
Walter R. Stahel, a founding father of the circular economy expressed his disappointment: "The transition is not championed by any major company or government.” He advised the audience to focus on the use of goods instead of their production. "You need to completely change your perception of waste. The goods of today are the resources of tomorrow.” The symposium was wrapped up by Carlos Alvarez Pereira, Secretary General of The Club of Rome. He sees it as the role of his organization to ask better questions about the future of humanity with an interdisciplinary approach. Why? "Because we are living in personal and sectoral bubbles. According to the logic of these bubbles, everything makes sense. But if you take all bubbles together, nothing makes sense, because we are committing suicide.” "The Limits to Growth”, published 1972 was the first attempt of a global model. The standard model has basically been confirmed since but there were also scenarios showing a balance between human civilization and global boundaries. To achieve this, all capacities must be mobilised: “The challenges we face cannot be solved by economists – alone. The mindset shift is crucial. Typically, it happens in time of crisis.”
Images: Tarek Carls
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