This is a very rough transcript of an interview done with Justin Ritchie and Seth Moser-Katz from the Extraenvironmentalist, a great “podcast, blog and video series that explores the mindset of an outsider looking in on Earth” – and a way of thinking as they proclaim. The original podcast from which this transcript has been produced (by myself, so all errors are exclusively my fault) can be found on Soundcloud: https://soundcloud.com/extraenvironmentalist/episode-83-1-andr-reichel-are
André Reichel (AR): If we want to restrict global climate change to about 2C we need emissions reductions in the range of 8 to 10 % per year. These are the scientific facts; you cannot debate them. But if we have reductions that are 8 to 10% per year for a prolonged period of time, no economist can tell you how we are going to have continuing GDP growth. Even Nicholas Stern, the preeminent climate economist, has noted that any reductions that go far beyond 1% per year are incompatible with economic growth. We need a huge decarbonization of the world economy and a dramatic scaling up of renewable energy that is going to take many years and many decades to come. A simple supply side solution as Paul Krugman and others advocate cannot solve the issue of climate change.
Extraenvironmentalist (EX): We just finished some time with the degrowth movement which met in Leipzig, Germany in September 2014 and there were a lot of people with interesting ideas what degrowth means and what the term entails. When you throw around these terms about reductions of resources, energy and consumption, people get a little bit worried because it goes against so much that they perceive to be normal. Could you talk a little bit about your feelings about the degrowth conference and what came out of it for you.
AR: For me the main result was that almost 3,000 people came to Leipzig and were discussing, for five days, issues of degrowth and a society that is not fixed on economic growth anymore. I was at the first degrowth conference in Paris six years ago and we were about 150 people, mainly researchers. And now in Leipzig there were so many “normal” people, deeply concerned and involved in transition practices, in transition town initiatives, community supported agriculture, repair initiatives, alternative regional currencies and so forth. So this conference to me marked the beginning of degrowth as a movement in Germany and as such it is now clearly visible. This movement and its momentum will sooner or later lead to some kind of political reaction, which is really interesting for me as I spent a lot of time in the research community and now seeing that so many people are involved is just amazing.
EX: We are talking here in the middle of October, a little over a month since the degrowth conference has happened. I was wondering if you could share your perspectives on conversations that have happened in the German media about degrowth.
AR: There was a kind of curiosity about what degrowth means and what kind of people are into this concept, with some coverage by big newspapers and media like Frankfurter Allgemeine Zeitung or DER SPIEGEL. But still I think it is a strange idea for some, to think about a society that is not fixed on growth. To me the greatest task for people affiliated with the movement is to explain what degrowth actually means; to distinguish between a postgrowth economy, a recession, and degrowth. What came out of the discussions, as a shared understanding, is that degrowth can be understood as a planned transition to a socially just and ecological sustainable postgrowth economy. As Peter Victor from Canada says, degrowth is postgrowth by design not by disaster. I think this is something that needs to be communicated much clearer than it has been in the past.
EX: You mentioned before that you think that, based on the action and the people showing up at Leipzig, political action might be around the corner. Are these ideas about degrowth able to make their way into the political world? I know that you work with the Green party in Germany. Does the Green party accept these ideas and will they embrace them?
AR: There is a growing discussion in the German Green party now around the notion of green growth and if the Greens should side with people who are advocating that; or if the party should have a more nuanced stance on these issues. Up until the degrowth conference a lot of Greens where somewhat in the green growth camp. After Leipzig there is a discussion taking off – partly fueled by a paper by two Greens, Dieter Janecek from the right wing of the Greens and Gerhard Schick from the party`s left wing. Both argue in it that the Greens should probably be a bit more growth agnostic. We don’t know if growth will continue to occur, we don’t know if green growth works, so we should make our social security systems, our tax systems a bit more growth independent – which is not the case up until now. So there is a discussion starting in the Green party here in Germany, not probably going full steam ahead into the degrowth movement but being a bit more growth skeptical, including being skeptical about green growth. With other parties I don’t see that, although a couple of years back even Wolfgang Schäuble, who is a Christian Democrat and now the German Finance Minister under Merkel, said that growth for the sake of growth is probably not a good idea.
EX: The really interesting feature about the German economy and its possible postgrowth future is that it is so heavily dependent on exports. I was wondering if you had any thoughts on how the economy would change in a postgrowth future. Because if the economy wasn’t pursuing growth domestically, it would presumably pursue it elsewhere in the world.
AR: This is a problem. However, if you look at German exports, the vast majority is going into the EU’s common market. It is not so much that we are exporting all around the globe – Germany is doing this, no doubt about that – but if you look at the numbers the main focus is within the wider European area. So maybe it is not such a big problem if we switch to more domestic production, as Europe really is one big domestic economy. However, if we look at the wider picture, postgrowth means that some aspects of the global supply chains that we are used to, on which we are depending on so much, and which are so vulnerable to resource shocks, maybe these have to be downscaled in a postgrowth economy. Probably we will be looking not towards domestic but more regional oriented economic activities in a postgrowth economy.
EX: I like this term that you have thrown out before: growth independence. It has a nice ring to it. I was wondering if you could explore that a little bit more. What does an economy look like that is transitioning into growth independence?
AR: What we need are clearly more regionally oriented economic cycles: from first production to manufacturing and consumption and recycling. Right now, if you look at supply chain structures, they are dispersed across the globe. In a postgrowth economy these supply chains will move closer to where the solution (for a customer) is provided e.g. where energy is created or food is created or mobility is created. So I think that we will see a restructuring of supply chains to a more regional level. I am not sure that it will be done just by itself, by market forces. There are good reasons for companies to look for more regional value creation, a regional supply chain is much more resilient to resource shocks and political upheavals. But at the same time I think we need some policy instruments to enable these more regionalized or even localized economic cycles to exist. This would be a clear path to re-embed our chains of production, our chains of supply to a more – lets borrow a term from Habermas – lifeworld-oriented context.
EX: You brought up that distinction between green growth and postgrowth. This is a really important debate in my view because there are these reports that came out lately, like the “Better Growth, Better Climate” report, which were gaining a lot of media attention, saying we can grow our economies better when we start tackling climate change. Not only do we not have to move away from growth to protect the climate but can grow even better by doing it. And I hear climate activists here in Canada arguing that if you bring up the idea of something that’s going to hurt economic growth its never getting on the political agenda. So we are going to hijack the idea of making progress on climate change. How to you respond to conversations like that and the idea that we can grow our economies better when we protect the climate?
AR: If we only look at climate change, which is only one environmental issue we have to tackle in the 21st century, if we just look at climate change we will have to make emissions reductions from 8 to 10% per year and this is unprecedented in industrial history. We don’t know how to do it if we keep everything else growing – even with green growth. If we just look at the progress we made with carbon intensity – how much carbon we need to spend for getting out one unit of GDP – this has been improving roughly about 1.5% per year. So we’re talking about an eightfold increase that we would need to deliver on the technological front, and this is the problem with the entire green growth strategy: it is almost exclusively focusing on technological progress. We don’t know what kind of progress this would be; we don’t have any kind of developments showing that we will have these technologies available; and we don’t need that technology in 50 years – we probably have a carbon free energy system in 50 years from now – , we need this kind of progress right now, starting today. So this is one weakness of the green growth strategy. The second weakness of the green growth strategy is that it is almost totally blind to the rebound effect. The rebound effect means, and you probably know this, that with any efficiency increase we will also induce more growth because if you become more efficient with using energy or resources, the prices of energy and resources go down. Normally this will result in more consumption if we don’t impose a tax on efficiency increase. So that is the second blind spot of the green growth strategy. If you say green growth you also have to say efficiency taxation, otherwise it will not work. The third blind spot of the green growth strategy is its reliance on growth itself. What I always find a bit puzzling, also with the “Better Growth, Better Climate” report, is that you still have this blind faith in growth itself: that we will actually have continuous growth in the future, even continuous green growth. But if you look to reality – and even to the very conservative growth estimates by the OECD or the IMF, which are certainly no degrowth advocates –, this points into a direction of much, much less growth in the future than we are used to; not only in the OECD countries but globally. So we have to get our head around that we probably – green growth or not – are witnessing the end of the growth economy as we know it. And this is something that neither “Better Growth, Better Climate” nor any advocate for green growth can solve.
EX: Anyone is pointing towards technology to save us and everyone says when the time comes capitalism will develop a strategy and a technology that will save us and make sure that everything will be fine. This brings up the larger picture how humans always seem to wait for the last minute to make these changes, these needed changes and for this issue, and for many issues, along these lines it is just too late for that. I am wondering how you go about teaching these ideas to students in your classrooms who are the future generations, who are going to have to deal with the effects of these miscalculations by generations that are in control right now. What are you telling young people how to deal with these things?
AR: First, you have to be very honest and show the problem in all its seriousness because you cannot say everything will be fine with technology. You really have to show the data; you have to show past development and certain behavior modes that we are experiencing; certain latencies in the political system and how long these things usually take. Normally I say, look, you have a great opportunity because you will be, after probably 120, 130 years or so, after the time of the great inventions in the late 19th century, the first generation for many generations that can really build a new economy; an economy of which we today don’t actually know how it will work. You will be the ones who are able to explore these new forms of doing economic action, of doing business, of providing solutions for society. You will be the pioneers, the new entrepreneurs of the postgrowth age. Not me, I am 20 years too old for this, but you will be the pioneers and there is an interesting new world ahead. You don’t have to follow the old trajectories anymore because they will break down anyway in a few years, so you will have the great opportunity to build something completely new to which there is no precedent for. Normally this encourages young people, to think anew, to create a new world. This is what young people are doing and want to do, so this is how I try to bring them closer to the idea of postgrowth and that the old world is inevitably dying.
EX: When I try to describe the idea of degrowth to engineering types or people that are very entrepreneurial oriented, they think that the idea of a steady state economy that is not growing would mean an end to the creative spirit of humanity because engineers and people studying business really like this idea of generating new ideas and growing a business from a start-up to a medium-size to a large company. Would this necessarily be the case in a postgrowth economy? How would you take this idea of business into the postgrowth world?
AR: The most important distinction is that if the aggregate, that is GDP, is not growing or even shrinking, this does not mean that parts of this aggregate cannot grow. Even in a postgrowth economy, even in an economy that is slowly contracting, there will be certain parts, certain businesses that will grow rapidly – at the expense of others. This is just a very extreme form of creative destruction, of the great innovation cycle of Joseph Schumpeter. So it’s not so much that it’s the end of innovation; it will probably mean a new dawn of innovation. We need new types of innovation and we will see growing businesses even in the postgrowth economy. And probably what we really have to understand when we talk about contraction, we talk about declining real GDP: we talk about the monetary aspects of the economy, not just the physical aspects. But what we also have to take in mind is that currently there is a huge shadow economy, not necessarily illegal, it’s just not represented in the numbers. A huge economy on top of our money economy that is not calculated but almost as big as our accounted for economy and in this type of economy I think we will see much more innovation happening in the future. So there is business opportunity to make good money – but not just money. That’s why I like the term that my colleagues at the Postgrowth Institute use, that business will be not for profit which means that they are not non profit but that there is more to business than just profit. I think this will be a very fruitful area with fertile ground for postgrowth entrepreneurs. And as I said most likely we will see more competition in some aspects and more innovation, just not the same kind of innovation. So that means we won’t see an iPhone 7, 8, 9 or 10 – maybe we will see it – but it will not be regarded an innovation anymore in the future.
EX: I am thinking “what would the iPhone then look like in the future?” Will it be like a slower iPhone or something that you can plant in the ground and grow like a tree, like a seed bomb? Or how are other industries going to see this kind of new entrepreneurship expanding, what would be examples for that?
AR: If a young person would come to me and ask me, what kind of industry should I prepare myself for, I would say, first, anything that would be somehow connected to the idea of a circular economy because this will be a major backbone of any postgrowth economy. And why is that so? If you look to natural ecosystems, reductive activities – getting stuff out of the world – are always a bit more in size and number than productive activities. The reasons are very simple: because otherwise stuff would just pile up. And so the same thing will account for an economy that is not growing or contracting to a steady state. Everything that is connected with keeping material within the economic use phase will definitely be a growth segment. In order to keep products with a longer lifespan or within perfectly closed material loops, these products will have to be designed differently, manufactured differently, and they will be sold and bought differently. So this is really a growing field in the future. And the second field, if you can call it a field, would be anything that includes collaboration: collaborative production, collaborative consumption, collaborative repair and reuse of products. This I think will also be a growth segment within the postgrowth economy. Maybe the best term for it would be a collaborative circular economy.
EX: The idea that Paul Krugman has been working on, that there are no limits to growth, was detailed in his most recent article on why fuel savings are rather easy to achieve. He explains how cargo ships can slow down and use less fuel, but more cargo ships are required to ship the same amount of goods. Is Paul Krugman, a nobel price laureate, the best spokesperson for the anti-limits to growth side? Because I can understand putting together an argument against the idea of limits to growth, but I feel like that argument is pretty easy to shoot down.
AR: When I was looking at the cargo ship argument of Paul Krugman, I was wondering where does Paul Krugman get all the resources and energy needed for building these additional cargo ships, including the maintenance infrastructure. I mean do they materialize out of thin air? Where do they come from? I admire and respect Paul Krugman for a lot of things, especially his willingness to be a political intellectual, an academic in the political debate. This is very important. But when you read through this article and he says: “Energy is nothing special”, you really say: “Ok, probably you are just a very classical economist.” E.g. just the issue of energy, where he says this is nothing special, it is just a commodity like all others: energy only comes with energy and the notation for this energy return on energy invested. So you need usable energy invested in order to get usable energy, and the more energy we have to spend to get it, the less energy we can spend on other things e.g. on cargo ships. In ignoring energy accounting, Paul Krugman is just repeating the same mistakes that economists have been repeating for the last 140 years or so. And the world has dramatically changed in the last 140 years.
EX: It’s actually disconcerting to me because it seems to indicate that people who are trying to put together an argument against the idea of limits to growth don’t really understand the argument or the physics that are involved either.
Paul Krugman in his article says that energy is just an input like any other input. How can you make a statement like that and can have any kind of sway?
AR: If I read through the article, this is also a political debate and Krugman might be concerned that some of the Koch brothers and other right-wing climate deniers now suddenly appear to side with the growth skeptics. And so he probably looked for a big hammer to smash on these arguments and didn’t think so much through what he was actually saying. He’s probably not pointing to all the ecologists in the room but towards the climate skeptics. He is fighting a fight in an arena that is totally not where this fight is being fought. And I think this is the problem with the article and also with the argument. Because otherwise Krugman cannot understand the issue of energy and the dramatic changes we see with the energy returns on energy invested. Richard Heinberg did great work on this matter with regard to oil. And if you look to these numbers, this is not monetary accounting but energy accounting and maybe this is the problem: that an economist is trained to translates anything into money. But we can have as much money as we like, this is never really a fundamental problem for the economy. But energy is different. And I think economists are just not trained to understand that not anything can be translated into monetary terms.
EX: We want to rap up in a few minutes but since we are talking about energy we want to ask you about the German energy transition strategy that’s underway, because the economy is undergoing this really massive built-up of renewable energy generation capacity. Is that a postgrowth strategy, could this help or is it in opposition?
AR: We definitely need, regardless if postgrowth or not, a 100% renewable energy system for various reasons. First, if it is there it will run carbon free and, most importantly, it would have zero variable costs: the sun doesn’t bill you, the wind doesn’t bill you. So that is a good thing in itself. What is interesting about the Energiewende in Germany, or energy transition, is that it didn’t start 4 or 5 years ago; it really started 20 years ago with the deregulation of the energy market, which is kind of a twist of irony in history. When the first renewable energy providers were formed after the deregulation of the market, they were bottom-up providers: local utilities together with campaigners from the anti-nuclear movement, buying their own local electricity grid and investing in renewable energy and also selling renewable energy. So this was really an interesting start for the Energiewende and nobody noticed it at that time that we had local energy, green energy, energy in citizens’ hands. This can be really perceived as a postgrowth strategy, strengthening local economic cycles, putting power to the people in more than just one meaning of the word. As the Energiewende is done right now I am a bit worried, because now the attention is shifting away from these bottom-up and decentralized initiatives towards the big utilities. And they had a huge problem in Germany because up until now only 5% of the electricity generated from renewables is provided by the big utilities. The other 95% come from totally different actors: local utilities, citizens’ initiatives, energy cooperatives, even investment funds. So I fear a bit that we are shifting towards the large-scale infrastructure solutions. We will have to see how the Energiewende will progress in the future.
EX: As we are moving forward into this postgrowth world where we are coming to many limits to growth in many different industries and we see the writing on the wall, I am wondering how we can expect our political and economic leaders to respond to it. Are we going to go all the way to the end and fall of the cliff? Or is there a slow tapering effect going on as we hit these final limits? What can we expect in the next 15 years?
AR: It is difficult to predict what will happen, but I am totally on the same side as Paul Gilding when he is writing in his wonderful book “The Great Disruption” that humanity is probably slow but not stupid. Before we hit the walls, we hit the brakes dramatically. I don’t think that it will be a slow process, I think we will struggle on for a while and try to come out of our various crises and tackle climate change with all the old instruments that are focused on growth. But when we realize that it ill not work, and probably we are 5 to 10 years away from this moment, then we probably will change very dramatically. At the same time what is happening right now, and going back to my Leipzig experience with the degrowth conference, there is so much local activism already underway, even new kinds of business, not for profit business, not just for profit business, energy cooperatives, community supported agriculture, new kinds of repair and reuse initiatives, all these things. So there is the new postgrowth economy already growing underneath the skin of the old growth economy, like in a larvae kind of phase. It probably doesn’t look so nice right now: the old looks not good anymore because it is already dying, and the new one is probably also not in a nice shape. But there will be this moment when the old shell will just fall off. And I think this will be a very dramatic moment and it will be happening in a very short time period. It will not be a slow transition to this new economy; it will be truly a great disruption.
EX: To close out I want to give an opportunity to talk a little bit about your work and some of the research questions you are working on now and how people can find your work.
AR: You can go to www.andrereichel.de and look up my website. I am trying to be a public scientist and blog about my work. What I am mainly concerned with right now is how to arrive at new measures of business success in a postgrowth environment; measures that are looking into the environmental value added and the social value added of business and how to derive certain strategies for business in the postgrowth economy. This is a main issue in my research. On the other hand I am really looking into the wider implications of postgrowth, from a cultural or even spiritual perspective. What a postgrowth world will actually mean for us, culturally, spiritually, and individually. This may sound not overtly scientific but I think these are the true important questions, the question about the good life and this question started economic thinking almost 3,000 years ago.