Scientist’s Warning on Affluence and Growth

Originally published on Nature Communications, this is an excerpt from an article describing scientists’ warning on affluence by Thomas Wiedmann, Manfred Lenzen, Lorenz T. Keyßer & Julia K. Steinberger.

Super-affluent consumers and growth imperatives

Growth imperatives are active at multiple levels, making the pursuit of economic growth (net investment, i.e. investment above depreciation) a necessity for different actors and leading to social and economic instability in the absence of it.

Following a Marxian perspective as put forward by Pirgmaier and Steinberger, growth imperatives can be attributed to capitalism as the currently dominant socio-economic system in affluent countries, although this is debated by other scholars. To structure this topic, we will discuss different affected actors separately, namely corporations, states and individuals, following Richters and Siemoneit. Most importantly, we address the role of the super-affluent consumers within a society, which overlap with powerful fractions of the capitalist class.

From a Marxian perspective, this social class is structurally defined by its position in the capitalist production process, as financially tied with the function of capital. In capitalism, workers are separated from the means of production, implying that they must compete in labour markets to sell their labour power to capitalists in order to earn a living.

Even though some small and medium sized businesses manage to refrain from pursuing growth, e.g. due to a low competition intensity in niche markets, or lack of financial debt imperatives, this cannot be said for most firms. In capitalism, firms need to compete in the market, leading to a necessity to reinvest profits into more efficient production processes to minimise costs (e.g. through replacing human labour power with machines and positive returns to scale), innovation of new products and/or advertising to convince consumers to buy more. As a result, the average energy intensity of labour is now twice as high as in 1950.

As long as a firm has a competitive advantage, there is a strong incentive to sell as much as possible.

Financial markets are crucial to enable this constant expansion by providing (interest-bearing) capital and channelling it where it is most profitable. If a firm fails to stay competitive, it either goes bankrupt or is taken over by a more successful business. Under normal economic conditions, this capitalist competition is expected to lead to aggregate growth dynamics.

However, two factors exist that further strengthen this growth dynamic. Firstly, if labour productivity continuously rises, then aggregate economic growth becomes necessary to keep employment constant, otherwise technological unemployment results. This creates one of the imperatives for capitalist states to foster aggregate growth, since with worsening economic conditions and high unemployment, tax revenues shrink, e.g. from labour and value-added taxes, while social security expenditures rise.

Adding to this, states compete with other states geopolitically and in providing favourable conditions for capital, while capitalists have the resources to influence political decisions in their favour. If economic conditions are expected to deteriorate, e.g. due to unplanned recession or progressive political change, firms can threaten capital flight, financial markets react and investor as well as consumer confidence shrink. Secondly, consumers usually increase their consumption in tune with increasing production. This process can be at least in part explained by substantial advertising efforts by firms. However, further mechanisms are at play as explained further below.

Hegemony of the growth paradigm

Following this analysis, it is not surprising that the growth paradigm is hegemonic, i.e. the perception that economic growth solves all kinds of societal problems, that it equals progress, power and welfare and that it can be made practically endless through some form of supposedly green or sustainable growth. Taken together, the described dynamics create multiple dependencies of workers, firms and states on a well-functioning capital accumulation and thus wield more material, institutional and discursive power (e.g. for political lobbying) to capitalists who are usually the most affluent consumers. Even if different fractions of the capitalist class have manifold and competing interests which need to be constantly renegotiated, there is a common interest in maintaining the capitalist system and favourable conditions for capital accumulation, e.g. through aggregate growth and high consumption.

How this political corruption by the super-affluent plays out in practice is well documented, e.g. for the meat industry in Denmark.

You can find the full paper in Nature Communications volume
11, Article number: 3107 (2020):

Featured image: Degrowth Demonstration Leipzig 2014 via Wikimedia Commons

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