“The new Union should be committed to and promote sustainable growth.” By James Bartholomeusz
In his Parliamentary hearing before taking office in October, new Commissioner for Jobs, Growth and Competitiveness Jyrki Katainen referred to a “sustainable social market economy” as the end goal of EU economic policy. Such a goal goes far beyond the €315bn that the Juncker plan seeks to inject into the European economy from June onwards, although this will undoubtedly be an important stepping stone. The aim in the medium- and long-term should be to create conditions under which the EU can blossom as a world leader in a future-minded form of capitalism.
The term “sustainable growth” has been thrown around a great deal recent, to the extent that it risks becoming nothing more than a voguish PR phrase. We need to reassert exactly what it means by first asking: what is “unsustainable” growth?
There are two ways in which growth might be considered unsustainable. The first is, most obviously, environmental. It is no exaggeration to say that the development of modern industrial capitalism has been a catastrophe for the planet. Technological advancement has fostered a hugely increased global population, along with an increasing proportion of that population enjoying an increasing level of material wellbeing. Yet these changes have also meant fundamental readjustments to the planet’s ecosystem – caused by a host of factors including global warming, deforestation and resource depletion – with the very real risk that the favourable conditions which first allowed our species to develop could soon disappear.
Fortuitously, technological progress has also given humans the tools with which to re-forge a sustainable symbiosis with their environment. We now have the very real prospect of transitioning largely or wholly to reliance upon renewable energy, as well as minimising the impact of pollution caused by our modern amenities. Yet the necessary shift cannot occur without concerted political will. Here, the European Union – as the world’s single largest economic bloc – can afford to be a leader. Europe must launch a multifaceted strategy to reduce carbon emissions, invest heavily in green energy and other eco-friendly projects, and instigate the harshest of restrictions against pollution and the dumping of waste.
Growth has also – all too recently – been shown to be unsustainable in social terms. Seven years on, the legacy of the 2008 financial sector collapse is still very much with us, in the effects of austerity measures and the periodic scares that the Eurozone is about plummet once more into crisis. Whether one’s instincts are for austerity or Keynesian investment, for or against the single currency, all must agree that cause of the crisis was an economic model in which unfettered greed at the highest level of the private sector was allowed to drive Europe and the rest of the world into the dust. It is impossible to measure the social impact of the crisis, both on people within Europe and those in countries beyond our borders who rely on our economic stability and prosperity for their own.
The neoliberal dogma that the free market, left to itself, will automatically deliver the best outcomes for society finally appears to be receding. In its place, we need to install an ethos of active government intervention which supports and directs business – especially small- and medium-sized enterprises – in delivering stable and socially-productive growth. This ethos, of course, cannot exist without a comprehensive welfare state which provides “cradle to grave” support for every citizen and ensures that the proceeds of growth are shared equitably across society.
All of this could be achieved within the existing state of the European Union, but it is hard to see how the current ragtag negotiation between 28 stakeholders is the best system under which deep economic reform should take place. The imperative for sustainable growth is not a stand-alone justification for federalism, but it certainly adds weight to the plethora of other arguments.
Image: ‘Western European broadleaf forest’ courtesy of Wikimedia Commons.