Capitalism has reached its limits

Capitalism is in crisis: The principle of »more and more« and »further and further« is obsolete, and growth can no longer be considered the most important criterion for the assessment of an economy. Klaus Dörre, a sociologist at the University of Jena, believes the world is on the verge of systemic change, but it remains to be seen whether stakeholders in business and politics can shape the necessary change towards more sustainability in an active and socially responsible manner.

You have spent a lot of time contemplating alternative economic models in the »Post-Growth Societies« research group. How might such alternatives shape up?

We need systemic change, so we should replace the term »growth« with »development«. New criteria are required; we should overcome our obsession with the gross domestic product (GDP). We could send a real signal by anchoring sustainability goals in our constitution—even at provincial level

Why is systemic change necessary?

I think the capitalist principle of expansion, or »land grab«, has reached its limits. We can already see clear signs of post-growth capitalism. For example, the economy may have recovered since the financial crisis of 2008, but growth rates are nowhere near as high as before the crisis. Despite the frequent use of technology, labour productivity is also rising at an increasingly slow rate.

Why is that?

The days of cheap resources are probably over for good. Things which have always been free—such as clean water and air—are suddenly being given a price. The pursuit of short-term profit is harming the environment without generating long-term returns. In other words, growth is slow to get going, and it is also linked to increasing inequality in national societies. We are locked in the jaws of an economic and environmental »pincer crisis«: The stagnation of the economy is causing a rise in poverty and unemployment, but the revitalization of economic growth through fossil fuels is exacerbating major ecological risks like climate change. This could be interpreted as a transition to a kind of post-growth capitalism.

Does the current system first have to crash? How can we succeed in our transition to a post-growth society?

We can either naïvely and passively wait for something to happen or we can actively shape change. For example, the end of the combustion engine in the automotive sector will hit Thuringia’s supply industry hard—many jobs will be lost. Or let’s take a look at Lusatia, where we must phase out lignite mining. In the face of climate change, the economy undoubt­edly needs to be fully decarbonized by 2050. There are major problems in store for companies that rely solely on coal or ignore sustainability requirements, but it is no use trying to sit out the change. The change will come, so stakeholders in business and politics must actively shape it.

How can we actively shape change?

By taking new approaches. Why not, for example, work with countries affected by hard structural change to create a model region for sustainable mobility, develop transport concepts beyond e-mobility, trial new mobility concepts, and help bridge the gap between urban and rural areas?

That would demand a certain degree of bravery in both business and politics.

There has indeed been little sign of this so far. Instead, stakeholders are calling for liberal market concepts, such as a special economic zone in the east with low wages, lower working standards, and even less corporation tax. These ideas have not proven effective in the past and will not prove effective in the future either. In fact, they are more likely to encourage even more qualified workers to leave the area.

But growth has always been promoted as our source of salvation.

The current generation of growth through fossil fuels is now reducing our quality of life. We need long-lasting goods that consume fewer resources and less energy. To put it more blunt­ly, it is good to stop driving SUVs, but it is even better to stop building them in the first place. We have to restructure society to meet our sustainability goals. This particularly includes the redistribution of decision-making powers from top to bottom. However, this does not mean that small and medium-sized enterprises (SME) should be nationalized—quite the opposite. As a federal state that is characterized and shaped by its SMEs, Thuringia must support these companies. But they must be encouraged to cooperate, or else they will not stand a chance in the future. For example, digitalization could offer tremendous opportunities, but many small enterprises lack the expertise required to make the most of these opportunities. That means the state must provide experts whose skills can be shared out amongst small enterprises.

In the face of climate change, there are growing calls for prohibitions and sacrifices, but politicians are ultimately shying away from such changes.

Prohibitions can restrict the freedoms of minorities that have so far been exercised at the expense of vast majorities. The most affluent 10% of the world’s adult population is responsible for half of the world’s harmful emissions, so the wealthy must be called to account! If we start burdening low-income groups with the costs associated with the transport and energy transition, we will have a situation on our hands like the yellow vest protests in France.

Swiss economist Mathias Binswanger claims that growth is the stabilizing element in our modern economies and that nothing works without it. Does that mean a lack of growth creates an unstable society, or do we need another stabil­izing element?

Development also includes growth to a certain extent, but what really matters is what grows, how it grows and why it grows. Needless to say, there needs to be an increase in wages and income among the lower classes; otherwise, these social groups will not be able to afford organic products or high-quality, long-lasting goods. That is why the status of the social services sector has to be enhanced. If care work was given a higher value, for example, the standards for growth would also shift accordingly. Social services can only be streamlined to a certain extent, however, so their expansion would only ensure a slow degree of social growth. An alternative would be to use robots in nursing, but is that really what we want?

Climate change activists and schoolchildren are piling on the pressure, such as by demanding an earlier coal phase-out, but is society even ready for such a profound change?

Change is inevitable and imminent, so it is up to us to shape it in a socially responsible manner. We should take a similar approach to Alexandria Ocasio-Cortez, Bernie Sanders, and other democrats in the USA, who have developed a »Green New Deal«. They demand a quick and radical departure from fossil fuels and CO₂ emissions, as well as state-guaranteed employment for anyone who loses their job in high-emission sectors. And they are not referring to nonsensical jobs, but well-paid and fulfilling employment. People will only be able to afford more expensive products from organic sources if they are paid a living wage.

Aren’t job security and the free economy fixed points that nobody likes to interfere with?

Jobs will be lost anyway when entire industries disappear. Instead, we should push ahead with product and process innovations in all types of companies, but this will not work with­out state initiatives or participation from below. History punishes those who sleep through change. 

Interview: Stephan Laudien