From Exportism and Growth Fetish towards an Eco-Socialist „Economy of Reproduction”

Theses by Mario Candeias

The `Acceleration of Growth Act´ is the first measure taken by the new governing coalition of Christian Democrats (CDU/CSU) and Liberals (FDP). The export shall again be the driver of economic growth. But German exportism based on growing exports and ailing domestic demand, can just as little be restored as it can be in China. Ecological and most important economic limitations and imbalances speak up against that.

1. In spite of 30 years of environmental politics and increasingly efficient technologies, the emission of gases relevant to climate change and the consumption of natural resources has not only not been reduced, but has instead increased. According to the Intergovernmental Panel on Climate Change (IPCC) this leads up to the worst case scenario of an impending global warming of six degrees Celsius – the 2-degree-target of an allegedly manageable climate change has already been missed. Every attempt to stimulate capitalist growth contravenes a solution to the ecological crisis.

2. Hopes set on a Green New Deal to combine the interests of the capital with ecological necessities in a harmonic way are unrealistic. Given the current power relations a “Green Capitalism” will probably be established, favoring market instruments and technical solutions. This creates urgently needed new investment areas for capital by commodifying nature and it’s protection, putting a price tag on it while non-profitable sectors are being neglected. The electric car for example offers new perspectives to car manufacturers but does not change anything about the structure of individual traffic, soil sealing or the enormous consumption of resources that are in part highly toxic, such as Lithium. GND aims at stimulation of growth and export, which does not limit the consumption of resources. It continues or even intensifies imbalances and competition in the global economy. Experiences with climate negotiations and emissions trading show: this takes too long. If „ecological restructuring“ is too slow, aggravated environmental- and socio-economical crises will be the result. If the restructuring was pursued thoroughly, for example through a significant cut in emission rights, it would inevitably bring about the decline of old industries and destruction capitals – and thus lead to respective resistance. It would be impossible to prevent economic crises and ruptures. There is no smooth transition.

3. Between 2001 and 2007 real annual growth of the German economy only amounted to an average of 1.1% anyway. Since the 70ies it has been declining. – Economic constraints to growth, not least due to the “structural heterogeneity” of Exportism and weak domestic demand. From an ecological perspective production must shrink in any case.

4. Since the beginning of the 21^st century Germany is the world champion in exports again (if we take currency relations into account; and no doubt if you take per/capita-relation). 2008 Germany sold commodities for a value of more than 1.2 trillion € on the world market. The trade surplus is nearly 200 billion €.  The one-sided orientation towards export growth was attended by real wages that have been stagnating since 1990 (including the boom-year 2007/08). In no other European country has the low-wage sector grown as rapidly. Consumption was no real factor for economic development: its contribution to growth has been at an average of 0,11% per year between 2001 and 2007. Hardly any other country is so dependent on export: about 45% of the gross domestic product rely on it. Since 2001 Germany´s trade surplus has summed up to a venturesome 1 trillion € and so redounds to the world´s huge current account imbalances. Simultaneously this `structural heterogeneity´ renders the so-called world champion of exports extremely vulnerable to global crises like the current one. The most important export industries are struggling with a severe decline in orders, machine construction about 50% less, the car industry 34% less, the chemical industry 27% less. The economic contraction is about 6% of GDP, especially the core industrial regions in the south have to deal with a contraction around 7,5%. The government reactions are stimulus programs, longer short-time-working-benefits, cash for clunkers to support car sales and employment. And before – as everywhere in Europe – enormous amounts of money were used to support the banks and the financial sector.

4a. The costs of the crisis and the enormous (trade) imbalances inside the EU led to a new state of crisis: a European debt crisis: With an average debt of 80% of the GDP and 6% annual new debts the Euro-Zone failed the Maastricht criteria by far (allowed are debts at a maximum of 60% of the GDP, and annual new debt at a maximum of 3 % of the GDP). Not those countries which spend a lot were hit the hardest, but those with record low tax rates, with a very low public expenditure quota, trying to court the timid deer called capital. Now every government in Europe is trying to implement ever harder austerity programs. For sure Hans-Jörg Herr will tell us more about that later. But one thing is for sure: if every country tries to save expenditures, to cut investments, to raise consumer taxes this will not accelerate growth but leads to recession. So prospects for German exports look bad – or end up in crowding-out competitors in the rest of Europe, while promoting deeper imbalances.

5. And the German model of export and growth is lacking a perspective. In the light of an increasing orientation to reduce national debt that exploded as a consequence of the crisis, enormous over-capacities, and stagnating demand, strong deflationary tendencies are to be expected over the next years. In the US the household will never again consume as much as before, they will be not able to. Therefore demand for imports will decline too. But when the “global consumer” USA, with a share of 16.5% of world imports, fails the expectations to support growth, then also the dynamic of China for instance is at stake. The assumption of decoupling global economic growth form the crisis in the US  disgraced itself. At the same time the poor profit prospects are contributing to a financial overaccumulation that has hardly been reduced until now, to an asset price inflation, and new speculative bubbles, accompanied by rising prices of oil and other resources due to peak-oil and other scarcities. No end of the crisis…

6. It is necessary to get away from exportist delusion and the fetish of growth. But how? There is no system-hopping. Therefore transformative steps are needed – a revolutionary Realpolitik (Rosa Luxemburg). An initial project could be the socio-ecological conversion of the car industry. State capital assistance should be bound to concepts of alternative production and partial or full public ownership of the company. This would have to be connected to an extended participation of the workforce, trade unions and the region, for example in regional councils which decide on the concrete steps for a conversion of a car manufacturer into a service provider for public mobility with ecological focus.

7. This is impossible to be achieved in individual companies, but requires deep structural change. Embedded in a macroeconomic orientation, conversion would therefore imply to transform our growth-orientated capitalist economy into an “economy of reproduction” that knows how to limit itself and how to create new wealth at the same time. Let us focus on a need-centred solidary “care economy” where people care for each other: social infrastructures of public health, care, education, research, social services, food (-sovereignty) and protection of our natural environments. These are central needs of which privation has been deplored for years. A reproductive economy also means a qualitative develop needs and production, but not quantitativ growth. This would contribute to truly ecological modes of living and producing and to developing a practice of “buen vivir” (good living) that many try to explore, not only in Latin America.

8. This goes together with an orientation towards domestic markets and production. The tendency to deglobalise and regionalise the economy also makes for a reduction of current account imbalances and export fetish. Through a non-mercantile expansion of the public, markets and privatization are being pushed back. Given the necessity to shrink certain sectors, strategies of a socially sustainable just transition have to be developed. This also implies that other sectors have to grow in the meantime relatively decoupled from material growth. Such qualitative growth is necessary for the time of transition also due to the deficiencies in many sectors of reproduction – especially in the global south.

9. To place reproductive work in a broader sense of the term at the center of a transformation project makes it possible to abandon the growth fetish – and by doing so questions the capitalist mode of production in the medium term. Ultimately it poses the question who decides on the deployment of resources in society and on which activities are socially necessary. This requires elements of participative planning processes, consultas populares and peoples planning processes, democratic councils.