Is Economic Growth Really Essential?

(page 5 of 5)

Shifting Focus

A company like IBM (IBM) is an example of how this can work. IBM has radically changed its business, moving away from material products and the production of more and more powerful computers. Today, the company focuses on a non-material resource: knowledge. IBM has shifted its emphasis to consulting and IT services and, as a result, has seen its profits grow despite the economic crisis.

A less-is-more strategy also works on the national scale. German GDP has grown by close to a third since 1990. At the same time, however, the country's energy consumption has declined by 7 percent. Cars are now more fuel-efficient, ships consume less heavy fuel oil and businesses use less electricity. However, one of the reasons Germany is in a relatively good position is that it has outsourced much of the dirtier aspects of its production to Eastern Europe or South-East Asia.

Of course, businesses and consumers have not changed their production and consumption behavior entirely on their own—government has given them a helping hand. To a certain degree, lawmakers can promote the desired kind of growth through the use of well-designed incentives.

For instance, they can require vehicle manufacturers to reduce average emissions to less than 120 grams of CO2 per kilometer driven, thereby stimulating the development of low-emission vehicles. Or they can attach suitable prices to a valuable resource like clean air which was previously available free of charge, by way of emissions trading—thereby forcing companies to invest in climate protection.

Better Recipes

The principle is clear: Resource consumption must be decoupled from growth. The respected US economist Paul Romer employs a kitchen metaphor to illustrate the concept. "Economic growth springs from better recipes," he says, "not just from more cooking."

This is effectively what representatives of the world's governments will be discussing when they meet in Copenhagen for the United Nations Climate Change Conference in December. But the world is still a long way from this goal.

Emissions trading is still limited to Europe, and the system can only become fully effective once every country on Earth is included. The entire global economy still depends almost entirely on fossil fuels, as evidenced by the fact that seven of the world's 10 biggest corporations are involved in the oil business. More importantly, most people probably couldn't care less how their economies achieve growth, as long as the growth figures they see are in positive territory.

Wiesbaden economist Norbert Räth, at any rate, is amazed at the seemingly miraculous powers of the number he calculates each quarter. When he announced the most recent figure of 0.3 percent growth in GDP, which took many by surprise, politicians, business executives and academics promptly interpreted the number as clear evidence that Germany is now squarely on the road to recovery.

"We weren't at all happy about that," he says, sighing. He would feel more comfortable if his calculations were not used to support all kinds of different interpretations. "Growth is undoubtedly a central variable," says Räth. "But it doesn't explain everything."

Translated from the German by Christopher Sultan

Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine

Business Exchange

Track and share business topics across the Web.