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Growth imperative

Growth imperative is a term in economic theory regarding a possible necessity of economic growth. On the micro level, it describes mechanisms that force firms or consumers (households) to increase revenues or consumption to not endanger their income. On the macro level, a political growth imperative exists if economic growth is necessary to avoid economic and social instability or to retain democratic legitimacy, so that other political goals such as climate change mitigation or a reduction of inequality are subordinated to growth policies.[1][2]

Current neoclassical, Keynesian and endogenous growth theories do not consider a growth imperative[3] or explicitly deny it, such as Robert Solow.[4] In neoclassical economics, adherence to economic growth would be a question of maximizing utility, an intertemporal decision between current and future consumption (see Keynes–Ramsey rule).[5] Other sociological and political theories consider several possible causes for pursuing economic growth, for example maximizing profit, social comparison, culture (conformity), or political ideologies, but they do not regard them to be compulsive. Possible growth imperatives are discussed in Marxist theory, Schumpeterian theory of creative destruction and ecological economics, as well as in political debates on post-growth and degrowth.[6] It is disputed whether growth imperative is a meaningful concept altogether, who would be affected by it, and which mechanism would be responsible.[1]

Meaning and definitions[edit]

At the macroeconomic or political level, the concept of growth imperatives is used by some authors when there seems to be no acceptable political alternative to economic growth,[7] because insufficient growth would lead to economic and social instability[8] up to "severe economic crises".[9] The alternative to growth would not be a stable stationary economy, but uncontrolled shrinkage.[10][11] The consequences of a renunciation of growth would be unacceptable; growth appears to be without a politically acceptable alternative.[1] While some search for purely "structural theoretical explanations for the commitment to growth",[12] others argue that this macroeconomic phenomenon must be examined at the micro level in line with methodological individualism to explain how and why individual actors (firms, consumers) act and how this interacts with collective structures, and correspondingly study the growth of enterprises with microeconomics and business administration and the increase of consumption using consumption sociology or consumer choice theory.[1][13]


The discussion on growth imperatives is part of a standing debate over the primacy of structure or agency in shaping human behavior. In the social sciences the term social coercion is used when situation-related circumstances[14] or strong social pressure[15] determine the behaviour.[1] According to Marxist theory, a coercion for firms to "grow or die" is due to economic competition.[16][17] According to these Marxists, capitalism "cannot stand still, but must always be either expanding or contracting".[18] Similarly, the environmental economist Hans Christoph Binswanger speaks of a growth imperative for firms only when they are existentially threatened by steadily declining profits and ultimately bankruptcy; in other cases he uses the weaker term growth driver.[10][19][20][21][22] These definitions can be summarized that a growth imperative exists if exterior conditions make it necessary for agents to increase their economic efforts as to avoid existential consequences.[1]

Political demands to overcome growth imperatives[edit]

In September 2018, more than 200 scientists asked the European Union to turn away from any growth imperative[104] – a similar demand was raised by the participants of the International Conference on Degrowth[105][106] and the post-growth working group of attac Germany.[107] But even within the post-growth or degrowth movement, the existence of growth imperatives is disputed.[1][29] Among German parties, the demand was included in the political programmes of the Ecological Democratic Party[108] and Alliance 90/The Greens.[109] Green politicians such as Reinhard Loske[110] or Jürgen Trittin[111] call for overcoming growth imperatives. In a dissenting opinion on the final report of the Enquete Commission on Growth, Prosperity and Quality of Life of the German parliament (Bundestag), the experts Michael Müller, Uwe Schneidewind, Ulrich Brand, Norbert Reuter and Martin Jänicke, as well as the members of the Bundestag Hermann E. Ott and the parliamentary group Die Linke, argued that "the question must be answered as to whether progress that is innovative and integrative, socially just and ecologically sustainable is possible without any growth imperative".[112]

Binswanger, Hans Christoph (2013). The Growth Spiral: Money, Energy, and Imagination in the Dynamics of the Market Process. Springer. :10.1007/978-3-642-31881-8. ISBN 978-3-642-31881-8.

doi

Binswanger, Mathias (2019). Der Wachstumszwang: Warum die Volkswirtschaft immer weiterwachsen muss, selbst wenn wir genug haben. Wiley-CVH.  978-3-527-50975-1.

ISBN

Ferguson, Peter (2019). "The Growth Imperative". Post-growth Politics. Cham: Springer. pp. 75–100. :10.1007/978-3-319-78799-2. ISBN 978-3-319-78797-8.

doi

Richters, Oliver; Siemoneit, Andreas (2019). "Technologie, Ressourcenverbrauch und Wachstumszwang". . München: oekom. hdl:10419/213814. ISBN 978-3-96238-099-1.

Marktwirtschaft reparieren: Entwurf einer freiheitlichen, gerechten und nachhaltigen Utopie

Richters, Oliver; Siemoneit, Andreas (2019). "Growth imperatives: Substantiating a contested concept". . 51: 126–137. doi:10.1016/j.strueco.2019.07.012. S2CID 203243535. Preprint: Oldenburg Discussion Papers in Economics V-414-18, November 2018, hdl:10419/184870.

Structural Change and Economic Dynamics

This article was translated from Wachstumszwang in the German Wikipedia which is based on: