Transcription of an oral Session by Dirk Löhr at the Second International Conference on Economic Degrowth for Ecological Sustainability and Social Equity in Barcelona on the topic "Managing Degrowth: Employment, Security and the Economy under a degrowth trajectory"

Abstract: Every euro or dollar of economic growth causes a stress mark of energy consumption, waste production, land use and water problems etc. The usual approach is to look for dematerialization of growth by technological innovations (eco‐efficiency and consistency). However, these approaches have limited success. Another strategy is to demand cultural change and sufficiency. Yet under existing conditions, sufficiency strategies are not feasible; economies need growth. Politicians have the choice between either ecological or social and economic collapse. In order to see whether there is a way out of this trade‐off, the sources of growth have to be analyzed. Growth is caused either by net investments (extension of the capital stock) or increases of productivity. As a result of a successful cultural change, the increases of productivity could be transferred into more leisure time. Nevertheless, net investments would continue to increase the endowment with machines and other capital. How can the net investments be reduced to zero in order to achieve zero growth? In a zero‐growth steady state, the whole income of the economy has to be consumed (consumption rate = 100%, rate of net savings and net investments = 0%). In a closed economy this is only possible if the interest rate and profit rate is approximately zero. Under the present economic conditions, such a vision cannot be put in place because the liquidity premium of money (Keynes) means that the interest rate is always significantly higher than zero. However, some prominent academics recently discussed old proposals such as the “free money” approach of Silvio Gesell. By increasing the stock of capital assets, Gesell wanted to reduce the interest and profitability level down to zero. However, even in a situation of low real asset profitability and low interest rates, a high velocity of money circulation and reliable demand should be granted by putting “carrying costs” on money. Though Keynes was very excited by the proposals of Gesell, he criticized the fact that Gesell did not see many of the further obstacles. However, these obstacles could be overcome by means of further institutional reforms. Despite the fact that Gesell was not concerned about ecological problems directly, his basic approach merits discussion.