On Economic Growth

Red Baron gets his economic insights from reading the news and articles on the Internet. This means I am no expert, but since my youth, I have always found the credo of a capitalistic liberal economy suspect: Economic growth guarantees prosperity.

On the other hand, capitalism needs economic growth to be stable. Otherwise, crises with millions of unemployed people will create social unrest. But is it possible to grow infinitely in a finite world?

We had accelerated economic growth in the past. It was based on cheap energy and on the exploitation of seemingly unlimited oil, natural gas, coal, ores, and other mineral resources.

You may like to add the recent UN Climate Change Conference, COP28, in Dubai.

For a long time, we have known that burning fossil fuels accelerates climate change. There were many solutions to reduce emissions, but action should have been taken. Now we are in front of the shambles or, if you prefer, with the back to the wall. We are now compelled to accelerate the transition of our economies to green standards to limit global warming.

Some optimists think climate protection and economic growth will go hand in hand. If there are only sufficient incentives for technical progress and innovation, technological progress will generate new jobs and economic development.

 

But will the amount of growth be sufficient to guarantee a stable society? Anyway, it will be necessary to transition to a circular economy. This is the only way to ensure that future growth consumes fewer natural resources.

I fear green energy will be sufficient only if we learn to limit ourselves. Many managers, entrepreneurs, engineers, and bankers know this but dare not speak out that there will be no green economic growth.

**