Bring 'the' Economy to the Community
Renowned sociologist Saskia Sassen discusses her latest book “Expulsions”
What happens when growth ends? Whether the world is heading for disaster or a golden age is a question of demographics.
People in the modern world have become accustomed to growth. The decades that followed the Second World War, population numbers, the amount of goods produced, income, productivity and economic power all increased in industrialised nations. Thousands of kilometres of roads were paved through the countryside while cities grew wider at the edges and taller at the centre.
Growth has become a kind of natural law and extends well beyond the industrialised nations: Since 1900, the quantity of goods and services produced per person, the per capita gross national product, has increased 14-fold. In that same time period, the number of people living on the planet swelled by four-and-a-half times. This means global production today is 64-times higher than it was at the beginning of the 20th century. And there is no end to this development in sight yet, as the global population continues to grow at the record rate of 80 million people a year. It is estimated that the number of people in Africa alone will more than double to 2.4 billion by the middle of the century. At the same time, the industrialisation of emerging nations is moving forward at a much more rapid pace than it did in the industrialised nations. Even a continent like Africa, which is somewhat behind this trend, is home to a middle class comprising 200 million households. These are viewed as “emerging consumers” with an annual income of over 2,000 US dollars, allowing them to finally consume all those products that have so long been beyond their reach.
Maternal and child death rates are falling in almost every corner of the world, as is the number of people facing starvation.
This economic growth is also reflected in people’s well-being: Global figures on the extreme poor who live on less than 1.25 dollars a day dropped by 69 million from 1990 to 2010. Maternal and child death rates are falling in almost every corner of the world, as is the number of people facing starvation. Life expectancy has risen the most in the least developed nations – by 17 years since 1970. Today people in Ecuador can expect to live 75 years on average, in Bangladesh 70. Since health and a long life are the most important criteria affecting personal happiness, we can assume that overall the global population has grown considerably happier and more satisfied over the course of the past decades. Human happiness has become part of growth.
We have enslaved our prosperity to growth.
It is no wonder then that we can no longer imagine a life without growth. Practically all scientific schools of thought, from the neoclassic to the Keynesian, monetarist to Marxist, view growth as the foundation for a functioning national economy. There is no party in the German Bundestag that does not support growth. In fact all the roles our government plays, funding the infrastructure and retirement funds, as well as all the job and financial markets are dependent on growth. After all a state, company, or private individual would only take out a loan in the expectation of being able to repay it based on future increased income. Taking on debt necessitates growth. It seems no one is asking whether sustained growth is even possible, since no one has another alternative to suggest. We have enslaved our prosperity to growth.
By now we consume 500 exajoules of energy a year, a number with 18 zeros nearly impossible for the human mind to comprehend.
Unfortunately all this growth with its beneficial side effects has a price. Massive amounts of energy are needed to produce all the goods, to build and operate all the buildings, and for mobility and agriculture. Since 1967, the human race has doubled in size, but energy consumption has tripled. By now we consume 500 exajoules of energy a year, a number with 18 zeros nearly impossible for the human mind to comprehend. Translated into oil units, this amounts to 1.8 tons of oil per person per year. And because fossil fuels still account for around 80 percent of the global energy mix, every single person on this earth produces an average of 4.7 tons of the greenhouse gas carbon dioxide. Not even two tons per person would be acceptable if we want to prevent irreparable damage to the climate.
Thus far there have been no signs of when and how emissions could be reduced to an acceptable level. They would need to fall fast and far. Yet despite all the climate negotiations, they continue to increase year by year, and only drop temporarily when the global economy spins into a recession. As such the carbon dioxide emission curve is fast approaching the upper limits of the set of scenarios calculated by the Intergovernmental Panel on Climate Change (IPCC) back in 1990. The so-called 2-degree goal so often cited as the upper limit of a climate change that would just be within the bounds of the bearable, is nearly impossible to achieve. If emissions continue to surge as recorded in the recent past, everything points to an average temperature increase of between 3 and 4 degrees of the lower levels of the atmosphere and a rise in global sea levels of up to 5 meters.
We can only conclude that the environmental movement has failed.
So it seems all the warnings issued by environmental conservationists and climate researchers in recent decades have fallen on deaf ears. While our understanding of how the global ecosystems are linked and the results of environmental damage is growing rapidly, this has not changed our continued inability to derive concrete action from this knowledge. In view of this fact, we can only conclude that the environmental movement has failed. And because people are on average doing better and better despite continuing global warming, despite the overfishing of the oceans, despite widespread loss of biodiversity and the erosion of agricultural fields, we cannot expect the international community to counter the negative impact of growth with farsighted policies any time soon.
…the most developed industrialised nations are currently drifting towards the end of growth – though entirely unwillingly.
But does this mean that humanity is inexorably instigating a global environmental catastrophe? Not necessarily, since interestingly the most developed industrialised nations are currently drifting towards the end of growth – though entirely unwillingly. In those countries most responsible for the global destruction of the environment, population growth is coming to an end. With socio-economic development, increased prosperity, better education and an equal role for women in society, the number of children has been dropping steadily. Around 90 countries worldwide have fallen below the number needed to ensure long-term stable population numbers. In Europe and East Asia, women are giving birth to fewer than 1.6 children on average. Even a country with a strong influx of immigrants cannot prevent the population from shrinking over the medium term. In Japan, a country highly resistant to immigration, the National Institute for Population and Social Security Research estimates that around 40 million inhabitants, or around one-third of the population, will be lost by 2060. This demographic change is accompanied by a unique historical ageing: by 2060 over one-third of all Japanese will be over 80. Because it is open to immigration, the EU is less affected by this demographic shift. But there too the workforce will be reduced by around 40 million. Without immigration it would be a loss of almost 100 million.
It is almost impossible to conceive of how the economy could continue to considerably grow under these conditions: Fewer people in the productive and innovative stage of life and more in retirement who need to be supported by the economically active means reduced growth in productivity and less demand, especially for those goods thrown on the market in increasingly rapid product cycles. Even today, all the early industrialised nations are suffering from continually sinking rates of economic growth. On a ten-year average, they only achieve one to two percent, and countries like Japan or Italy are recording no or even negative growth. Economists refer to this trend effecting more and more industrialised nations, and in which demographic change plays a key role, as secular stagnation.
So the first industrialised nations already have one foot in post-growth without even realising it.
At the same time, this dwindling economic growth is accompanied by increasing national debt. This simply means that growth is increasingly driven by loans, by government economic and investment stimulus plans financed by credit. Growing national deficits are increasingly revealing themselves as vicious cycles, since the growth necessary to repay the national debt apparently cannot even be driven by assuming increasingly high levels of debt.So the first industrialised nations already have one foot in post-growth without even realising it. In Japan this has already resulted in national debt that is 240 percent of annual economic performance. This means the Japanese would have to work for free for almost two-and-a-half years to pay off this mountain of debt. Europeans are moving in the same direction with their desperate attempts to return to past growth rates. They seem incapable of comprehending that the growth crisis is not a temporary state, but rather contingent on the system. It is the unavoidable result of extremely worthwhile individual developments – such as improved living conditions, better education, and equal opportunity for women and men. These developments, which are spreading to practically every corner of the globe, form the foundation of demographic change. They are the reason population growth drops below the replacement rate of 2.1 children per woman, the number of young people entering the workforce falls, and the population ages and begins to shrink at some point.
Fewer people who consume less are the most important step towards sustainable development. The environmental movement has been demanding this shift for years, though apparently unsuccessfully as noted above. The fact that the inhabitants of highly developed countries are moving in this direction is more an accident and not the result of a consciously regulated transformation. This is exactly why neither economists nor ecologists are pleased with this unexpected path towards sustainability. The economists are unhappy because they still believe in the necessity of growth, and the ecologists are dissatisfied because they had hoped their decades of warnings about the negative consequences of growth would make people see reason.
Ecological conditions on the earth will inevitably worsen before they can improve.
But if prosperity inevitably brings the end of growth, will our environmental problems simply solve themselves? The answer is a resounding no, since thus the end of growth can only be predicted in the most developed nations at best. Despite the foreseeable population decline, these countries are still well above the acceptable level of resource consumption and greenhouse gas emissions. Conversely too, the less developed countries that comprise most of the world desperately need economic growth to break the cycle of poverty and population growth. People in the poorest regions need a stable energy supply, schools, hospitals, roads, trading and traffic systems, and jobs most of all. Even if the most environmentally friendly technology is used, this takes raw materials and drives up emissions. Steady rising consumption is coupled with increasing prosperity. To meet demand, some studies predict that the global production of goods and services will triple by 2050. As a result, ecological conditions on the earth will inevitably worsen before they can improve. There is no alternative to this development, for without it the world’s population will continue to explode.
Even given all the clearly recognisable problems, the chances of a happy ending do not look all that bad. One after another, all the countries on earth seem to be following the same development path taken by the industrialised nations and are enjoying greater prosperity and quality of life. As a result, the number of children born in emerging and most developing countries will drop considerably faster than in the industrialised countries. While women in the developed world today give birth to around one fewer child than their mothers did, in poorer countries it is two, three or even four fewer children. Over the past 30 years, the average number of births per woman fell from 4.3 to 1.9 in Brazil, from 6.6 to 2.3 in Bangladesh, and even from 7 to 1.8 in Iran.
Over the medium term, we can predict that the global population will cease to grow.
Lower birth-rates are clear evidence of better education and socio-economic development. The results of the Millennium Development Goals in 2015 show that almost every country is taking steps – more or less effectively – in this direction. So over the medium term, we can predict that the global population will cease to grow. Whether this happens at nine, ten or eleven billion is less important than the question of what happens then.
It will probably shrink considerably thereafter. Anywhere people can freely determine the number of children they want to have while enjoying good living conditions, they chose to bring fewer than 2.1 children into the world on average. This is the “replacement rate” that would be necessary to ensure stable population numbers. So if the goal of the international community is to ensure high quality of life for all human beings on this earth, then a global drop in population is foreseeable. Living conditions could be the new goal, for example, like in Denmark today. Social disparity is low, the political situation stable and democratic, security is high and, according to international questionnaires, Danes number among the world’s happiest peoples. Under these living conditions, considered optimal from today’s perspective, women give birth to 1.85 children on average.
By 2300 fewer than 3 billion people would inhabit the earth.
If all the world’s countries could develop according to the Danish model over the medium-term, the global population would begin shrinking in just a few decades. By 2200 there would be some four billion people, roughly half of what we have today. By 2300 fewer than 3 billion people would inhabit the earth.
Due to numbers alone, a population of this size could hardly damage the environment. On average they would be older than people today and as such considerably more peaceful. They would also be more educated and could better adjust to the anthropogenic changes their forebears set in motion. In just 200 to 300 years, they would have arrived in a paradise of sustainability.