Economic growth and moderation

The societies in the rich countries of the West are driven by the dictates of economic growth, technological progress, efficiency and unlimited free trade. However, often questions are raised about an economic system in which permanent growth is still seen as the panacea for ending poverty and achieving prosperity for all citizens of a country. At the recently established Institute of Economics and Theology of the Erasmus University in Rotterdam, key comments on this issue were made by former ceo s of large companies. Some comments show how the vision set out by Pope Francis in Laudato Si’ and Laudate Deum is correct.

First. In the 1970s, the Club of Rome predicted that economic growth could not be unlimited (cf. Laudate Deum 24-27). Nobel Prize-winning economist Milton Friedman replied to Club members that they did not fully understand the market and market forces. For him, business economics and macroeconomics knew no limiting factors. Moreover, he considered resources unlimited: substitution and innovation would solve any problems that arose. Scarcity existed only in terms of capital. But the Club of Rome spoke prophetic words.

In the West’s current economic system, industrial society has almost exhausted natural resources. And just the opposite of before, there now seems to be an abundance of financial capital, of which negative interest rates are the ultimate proof.

Second. The ownership and exploitation of natural resources is one of the fundamental principles of market capitalism. For example, water is owned by a company that, in return for guaranteeing the supply of drinking water, sells it to ‘consumers’. Citizens no longer have a say in the price, distribution, reliability and sustainability of management. Market capitalism has brought great prosperity to the northern hemisphere. However, the exploitation of resources has come to privilege individual corporate interest. The awareness has been lost that natural resources are donated to humanity as such, no one owns them but only has the use of them. This disappearance has led to the impoverishment of the earth, because certain values such as solidarity, equality, sustainability, justice, and cooperation have only remained on paper. The land is no longer seen as a common home.

Third. The processing of fossil energy leads to emissions into the environment that endanger public health. Consumerism has led to the production of poly- and perfluoroalkyl substances, incorporated in lubricants, food packaging materials, clothing, textiles and cosmetics, which have now been found to have a very harmful effect on the immune system, blood cholesterol, liver and kidneys. Furthermore, not only industry but also the way food is produced is causing the loss of biodiversity and natural diversity in raw materials. Regenerative agriculture will become necessary for the health of humankind.

Fourth. Regarding the structure of the financial system, it can be observed that money always enters into circulation as debt in the form of loans or mortgages. Value is created to be repaid. Monetary policy aims to maintain inflation so that everything is more expensive tomorrow than today so that consumers prefer to spend their money today rather than tomorrow. This system does not serve humanity and it does not serve the Earth. It leaves humanity vexed and restless. Businesses must become social enterprises in which not the profit of capital but the profit of values must become central and must be codified. Entrepreneurship must of course be preserved. But the continuity of an enterprise must be guaranteed if the profit of capital is at the service of values inherent in the bonum commune. A system in which money enters into circulation in the form of debt and deliberately sought inflation do not help in this regard. These manipulate economic growth, leading to unrest and uncertainty.

In short. It is important to continue investing in the technology that will enable humanity to live within a few decades not from fossil reserves but from the flow of life: the interaction between the earth and the sun. But it is even more important to recognise that changes in socio-economic systems (currently based on growth) are always linked to behavioural changes in groups and, above all, to changes in the inner disposition of each individual. Changes in systems, group consciousness and individual consciousness are ideally determined by three fundamental thoughts. All three were articulated by Pope Francis.

Firstly, the rich and western world owes a great social debt to the poor who do not have access to clean water, because they are denied the right to a life in accordance with their inalienable dignity (Laudato Si’ no. 30).

Secondly, everything and everyone is related to each other and humanity is a family that, vulnerable like a nomadic people on a pilgrimage, is united with tender affection not only to each other, but also to sister sun, brother moon, brother river and mother earth (cf. Laudato Si’ n. 92; cf. n. 110). Humanity depends on this brother, sister and mother. It is not the other way around (cf. Laudate Deum 67-72).

Thirdly, it is necessary to arrive at an economic system in which permanent economic growth is not seen as a source of prosperity, but rather a moderate and austere lifestyle is conceived as a source of happiness, well-being and peace. Justice and peace on earth are not possible without a personal and collective pursuit of moderation that stems from the realisation that enough is enough. Trying to achieve more creates turmoil on an individual and collective level (Laudato Si’ no. 225; Evangelii Gaudium no. 71; Laudate Deum 31-33).

Moreover, in consumer societies, solidarity and empathy are only realised through gratitude for the fruits of the earth and the work of our hands, to the extent that this work is consciously done for the happiness of others.

The question then arises of how to develop an economic system in which austerity and non-permanent growth are seen as the panacea for ending poverty and achieving prosperity for all citizens of a country.

*Member of the Pontifical Academy of Theology

By Paul van Geest*