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To get out of the growth trap we need a fundamental transformation of our economy and society, says Tim Jackson, author of "Prosperity without Growth". Financial markets, driven by excessive returns on investment, and a culture of consumerism build up "perverse incentive structures" for even more consumption and exploitation of resources. To counteract this we need more than volontary ethical investment. We need a change in ownership structures so that the economy serves the common good.


Tim Jackson, Professor of Sustainable Development at the University of Surrey, England. Author of the book "Prosperity without Growth" 


David Goeßmann: The title of your book is “Prosperity without growth.” You are demanding that the economy is run another path. Talk about this path.

Tim Jackson: The starting point is perhaps where I finished before: We have been persuaded into a situation where material
goods deliver everything in our lives. Our sense of identity, our sense of purpose, our connections to other human beings. And it is a very simple question to ask, is that legitimate? Is that route towards happiness and well being a legitimate one, does it really help my social connections to be caught in trap where I must by more and more new stuff to maintain those social connections? Or is there a way to think about prosperity that is different to thinking about income growth, different to thinking about material growth. What does prosperity actually mean to us as human beings. A starting point is to come up with a concept of prosperity in which instead of thinking about the means to an end material goods and incomes as the means to social connection and social relationships, we start to concentrate on the things that really matter to us: Our family, our friends, our community, our participation in society, our sense of meaning and purpose, our engagement in life and these are very fertile ways to think about how we organise society differently. But they rely – and lot of the book attempts to describe this – they rely on having a different kind of economics. They rely on having an economics that doesn’t put at its heart the idea of a selfish materialist human being but accepts a broader version of what it means to be human. They rely on an economics that thinks about the long term in relation to investment. They rely on an economics that reforms financial markets to make them more prudent, more secure, more able to invest in the ecological assets that we need for survival. They rely on an economics that reforms what companies are doing. How people own assets, how returns to companies are measured and how they are financed. This is not a trivial task, again. It is a task which calls on us to make concrete revisions to our economic institutions in ways that better reflect what prosperity really means to us. Prosperity in the Latin (which is where the English word prosperity comes from) it has its roots in the world for hope. Ironically we have cashed out that idea of hope as income and because we have cashed it out as income we are in the process of undermining hope by destroying the conditions for future well-being. My argument, my call, is to reclaim an idea of prosperity that does give us some hope for the future.

Fabian Scheidler: How can corporations and banks be made work for the common good. Now they are mainly going for the most profit they can, which is not essentially the most sociological and ecological type of investment. What has to change in order to make corporations and banks work for the common good?

Tim Jackson: Well, some companies are beginning that path, some companies are for example within the investment sector going for more ethical investments. And these are the kinds of companies that will forgo certain kinds of investment, because they degrade the natural environment, they do polluting or they’re socially undesirable. So, this is the beginnings, actually, of a movement from within the business sector itself to reform itself. And what is clear is: it hasn’t gone far enough. And actually when you do make those decisions to be ethical as a business or ethical as a company, you tend to disadvantage yourself with respect to the competition. So when you ask what has to happen: we have to be able to encourage this form of company that is making ethical choices. We have to put in place; actually more enable mechanisms for more companies to operate in this way. And we then have to think about shareholder structure, we have to think about whether shareholder structure in its conventional form is a legitimate form of organization for companies in a sustainable world or whether actually we have to reform the fiduciary duty, which says that you meet the expectations for rising profits in your shareholders irrespective of the cost to society. It is actually is blinding the obvious at some level, that we should not be allowing financial structures or ownership structures that degrade the natural environment for the benefits of a minority; we actually have to create structures which protect that environment, return the benefits to the community and create social investments  that really protect peoples’ well-being likewise. And then there is a huge set of interventional points, some of them are about stimulating small-scale companies, you are already doing a right thing. Some of them are about setting a playing field, so that the ethical companies in the mainstream can prosper and survive. And some of them are more about restraining bad behavior, what is quite categorically bad, unprudential, risky behavior, and saying it’s no longer appropriate for the financial sector for example, to take desperate risks with peoples’ money for their own benefit and expect the public sector to bear the cost of those risks, for decades to come. So it is a spectrum of interventions from gross food nourishment to political activism really to create change in our economic institutions.”

David Goeßmann: Critics of the degrowth movements argue that if we leave the path of growth, employment could go down. What are your thoughts on that?

Tim Jackson: It’s why it’s a dilemma in some ways. The dilemma of growth is a dilemma because growth is unsustainable but degrowth tends to be unstable; we don’t know how to make economies work when they’re not growing. Now this is actually very interesting. When you look at it more deeply, it turns out that degrowth is unstable in a growth-based economy. So degrowth isn’t unstable in its own terms, necessarily, but it’s definitely unstable in a growth-based economy. And so the things that you have to tackle to make degrowth stable, one of them is the question of jobs; and in some sense that’s almost of an arithmetical problem; that you lose jobs when you stop growing only happens because we continually pursue labor productivity. So we do more and more things which each worker year on year and that means if we don’t grow our economies, we’ll need fewer workers next year to do the same amount that we did this year. And so someone’s out of work, so they don’t have money in the economy, so you’ll have to pay unemployment benefits so there’s less spending power, so fewer people are required to work and so you get into a vicious circle, instead of a virtuous cycle of growth, you get this vicious cycle of collapse. And that’s the fear of a degrowth economy, that labor productivity increases will mean fewer and fewer people employed and a collapse of the economic structure. So actually, arithmetically, you have a couple of things to do about that. One is to accept labor productivity. And to accept the gangs of labor productivity as less working time; so okay; instead of putting some people out of work, we just share the available work more evenly. So the some of us, who are working too long hours, work fewer hours and the ones who don’t have any work will get some work. And you need that policy; you need that policy in place to say that work time reduction is the way to treat labor productivity gangs rather than expanding our economy in order to keep people in work. That’s a well-known solution; it was a solution known to very, very early classical economists for nearly a century. And so that is a legitimate response. But there’s another really interesting response to this arithmetical challenge; which is to ask the question: why do we continually want increases in labor productivity? I know for sure that some kinds of jobs I just don’t wanna do; and some places where it makes sense to reduce the amounts of labor in the economy because it is dirty work and it’s horrible, nobody wants to do it. But there are also jobs where actually human labor really matters, so the relationship between the doctor and the patient, the relationship between the teacher and the pupil, between a social care worker and a client. All of these are really important services, human services that improve the quality of our lives and in which it makes no sense at all to increasingly chase labor productivity. Because it’s actually the labor that goes into it that provides the value of that service. So here is actually another road towards a possible degrowth of our economy. One road is to work less; the other is to work in jobs which don’t increasingly chase labor productivity, which absorb labor into the economy. And this is a very, very fruitful avenue for overcoming that dilemma, for actually making something like degrowth possible in a different kind of economic system.

Fabian Scheidler: Which are the forces which prevent such a transition?

Tim Jackson: The forces that prevent that transition are complex and interlinked but one of them is around the structure of the financial system in the way that financial markets work. Very, very short-term, very, very highly incentivizes; the expectations are very high in terms of investment; investments in which the real true costs of those investments to society are never affected. So this is a financial system that’s deeply unfair. It’s skewing profits towards a minority of a society; it’s creating risks that are completely unpalatable from any moral point of view; and the financial system which drove us to the edge of collapse only two years ago. So this is a very strong driving force and it’s a place desperately in need of reform. And then we have, of course, a set of structures around that, the way that businesses respond to the need to raise finance to do their business, is heavily implicated by that financial system. So businesses find themselves caught in a trap where they need to grow to survive and they need to produce more stuff in order to pay off the loans that they owe to the financial system. And then because they need to produce this stuff, they also need to sell it, so they have to persuade us consumers that we want to buy it. We have  a set of things all linked up, a set of persuasions really, and what’s the impacts of this, well it’s kind of we’re being persuaded to spend money we don’t have on things we don’t need to create impressions that don’t last on people we don’t care about. It’s a perverse set of incentives - but it is a very powerful set of incentives and those are the forces that we need to dismantle.

David Goeßmann: One final question: Is a non-growth society possible within the framework of a capitalist society and global competition?

Tim Jackson: In a way I think I prefer not to be too drawn into the question of capitalism verses because we’ve got a very dichotomized debate; is it capitalism or is it communism which is really there the alternative on the table. And I think that’s a misleading dichotomy at this point in time because we’re actually partly just looking at what’s happening arguably in the most successful capitalist economy is a communist economy: China. And so this is a world in which that division is no longer valid. But your question is perfectly valid: is capitalism capable of delivering this transformation? And I would sort of suspend that argument as a linguistic one. What I would want to say is: this form of capitalism is incapable of that transformation. So we need quite clearly to reform the way that returns on investments are made and measured; we need quite clearly to reform ownership structures and what is called the prerogative of capital, the ability of the owner of capital to distribute the services to their own benefit. We need to reform those things. And that means we need to reform financial markets, we need to reform the measurement of the terms, we need to reform ownership structures and we need to reform the rights and duties of companies in the market. And then the question is -which you could quite legitimately ask: when you’ve done all that - is it still capitalism? And I suppose, it is what you call it: if you want to call it capitalism because you like the name, then I will be fine with that. But the one thing is clear; it’s not this kind of capitalism. This kind of capitalism has reached the end of the line.

Fabian Scheidler: “Thanks so much for the interview, Mr. Jackson.”