Germany’s economy is experiencing stagnation, prompting debates about the necessity of growth. While some argue that continuous economic expansion is unsustainable and detrimental to climate and biodiversity, others maintain that growth is vital for prosperity. Current economic trends show declining investments and stagnant real wages, with projections for modest growth ahead. Despite discussions on achieving ‘green growth,’ the government’s focus remains on revitalizing the economy, highlighting the contrasting views on the importance of growth versus sustainability.
The Current State of the German Economy
The German economy is facing stagnation, prompting discussions among politicians and economists about the need for change. However, there’s an alternative viewpoint: Is economic growth truly essential for the country’s future?
The critical perspective on economic growth has even made its way into the Duden dictionary, defining ‘growth fetishist’ as someone who overly values economic expansion. This term is categorized as pejorative, reviving a debate that originated in 1972 with the ‘Club of Rome’s’ report on ‘The Limits to Growth.’
Fast forward over fifty years, and customers at a poppy seed shop in Gießen, one of Germany’s oldest organic stores, echo similar sentiments. Georg Rieck, the founder of the organic store, asserts, “Eternal growth is simply not possible.” It’s now widely recognized that the pursuit of growth often sacrifices our climate and biodiversity.
The Challenges of Economic Growth
When this viewpoint is presented to economist Volker Wieland from Frankfurt’s Goethe University, it is met with skepticism. He believes such opinions are as misguided as thinking, “Electricity comes from the socket.” Entrepreneurs like Andreas Widl, chairman of Samson AG, share this disbelief. Widl argues that our prosperity is rooted in past growth, and abandoning future growth is inconceivable.
In 2023, the German middle class reduced investments in climate protection, further complicating the situation. Economic growth has steadily declined over the decades, dropping from over eight percent in the 1950s to around one percent annually in the past two decades. In fact, projections for 2023 and 2024 indicate a slight decrease in economic performance.
This economic weakness poses a threat, warns Widl. “Large corporations invest in areas where growth is expected,” he explains, suggesting that this could create a self-reinforcing downward spiral. Economic experts anticipate only modest growth for Germany in 2025.
Moreover, stagnant real wages highlight the impact of a shrinking economy. Wieland points out, “If nothing grows, there are no increases to distribute,” leading to intensified struggles for distribution. In comparison to other industrial nations, Germany’s growth and future prospects are lagging, widening the gap with economies like the USA, where real wages have risen since 2018.
Simultaneously, it is crucial that growth does not come at the expense of the environment. The goal of ‘green growth’ is to separate economic expansion from climate-damaging emissions. In this regard, Germany is making progress; since reunification in 1990, the economy has expanded by nearly half while greenhouse gas emissions have decreased by about a third. Wieland emphasizes, “We can better protect the climate with more growth.”
However, in the current scenario, achieving significant growth remains a wish rather than a reality. It is a primary objective for the new federal government to stimulate growth. Despite varying strategies among political parties, there is a consensus: more growth is preferable to stagnation.