Roland Berger discusses the price of growth
From left to right: Dr. Roland Falb (Roland Berger Strategy Consultants), Christian Felber (Attac Austria), Prof. Dr. h.c. Roland Berger (Roland Berger Strategy Consultants), László Andor (EUCommissioner responsible for employment, social affairs and inclusion), Prof. Zhang Weiying (Guanghua School of Management, Peking University), Dr. Andreas Ludwig (Umdasch AG), Dr. Martin Wittig (Roland Berger Strategy Consultants), Rupert Petry (Roland Berger Strategy Consultants)
Sustainable development versus GDP orientation at the Summernight Symposium
Do we need to widen the GDP approach or create a whole new economic system? This was the question debated at the 13th Summernight Symposium, given by Roland Berger Strategy Consultants on June 20. The venue was once again Vienna's Palais Liechtenstein. Big names from Austrian business came together to discuss the issues with EU Commissioner László Andor, Economics Professor Zhang Weiying (Guanghua School of Management, Peking University), top executive Dr. Andreas Ludwig (Umdasch AG), capitalism critic Christian Felber (Attac Austria) and the strategy consultancy's founder and Chairman Prof. Dr. h.c. Roland Berger.
"Although we seem to have got over the economic crisis, there is instability in the established economic, financial and social systems as well as in our social and political structures. And this instability leads decision-makers in business and politics to question whether and in what form growth will still be possible in the future," said Rupert Petry, Managing Partner at Roland Berger Strategy Consultants' Vienna office, introducing the evening's topic. While the dominance of market-oriented GDP was universally palpable, it is now increasingly being called into question as the measure of economic success. "An economic policy geared solely to pushing up GDP ignores not only ecological factors but also the question of wealth distribution and a population's happiness. This is why more and more countries are developing new indicators that allow material living standards, environmental quality, educational opportunities, life expectancy, social security and personal happiness to be factored in," explained Partner Roland Falb in his introductory remarks.
Europe leading the way in alternative growth indicators
At the end of 2007 – before the global crisis had broken out – the European Union had already recognized the limits of GDP as the sole measure of economic success, explained László Andor, European Commissioner for Employment, Social Affairs and Inclusion. The EU criticized GDP as a measure that emphasizes short-term economic activity rather than sustainable development and called for the introduction of additional wealth indicators. This view had, he said, been reflected in the "Europe 2020", the Union's agenda for smart and inclusive growth presented in 2010. "Recent decisions in Europe underline our determination to work for more employment and growth and to do everything we can to promote economic recovery. We mustn't leave anyone behind if we want to emerge stronger from the crisis," said Andor.
China: from growth at any price to sustainable development
In its current five-year plan, China is completing a turn from quantitative growth to qualitative development, explained Professor Zhang Weiying, from the Guanghua School of Management at Peking University. At over 11%, GDP growth to date is almost twice the target envisaged by the government. He said that the unflagging push for higher GDP was now presenting China with serious problems. The environment is suffering, the economy is getting out of balance, and the income gap between rich and poor continues to widen. "Efforts to restore the economic balance are based on raising resource efficiency and boosting domestic demand," he said.
Alternatives to GDP and the limits of reform
The ensuing panel discussion centered on alternatives to growth. Professor Roland Berger said it was wrong to give the concept of growth a negative connotation. Only steady economic growth would lead to more employment and give growing numbers of people opportunities to raise their incomes. Growth enables a better and happier life. Even if GDP retains its validity as a parameter, Berger sees scope for adjustment: "I can certainly imagine supplementing GDP with indicators like subjective life-satisfaction, objective life-satisfaction, social cohesion, environmental quality, resource efficiency and institutional quality," said Berger.
From an opposing position, Attac spokesperson Christian Felber argued for a completely new economic system: "88% of Germans and 90% of Austrians would like a new economic order. The model of a 'common welfare economy' aims at overcoming these contradictions by changing direction at the heart of the system and enabling individual economic actors to switch from the pursuit of self-interest to the prioritization of the common good." The common good should no longer, he said, be just a desirable side effect of the individual pursuit of advantages but the actual purpose of economic activity. "Integrated concepts like social and environmental accounting, EMAS and ISO norms, quality management and balanced-scorecard systems should be cohesively bundled to form a legally binding ethical tool," Felber demanded.
The view from the practical side of the issue was presented by Andreas Ludwig. He argued for making actions on sustainability more integral incentives for corporate managers. He adopted a pragmatic stance on the question of GDP add-ons and alternative economic systems: "There seems to be no disagreement between us on the objective, but there are very different ideas on the best path to follow."
Do we need to widen the GDP approach or create a whole new economic system? This was the question debated at the 13th Summernight Symposium, given by Roland Berger Strategy Consultants on June 20. The venue was once again Vienna's Palais Liechtenstein. Big names from Austrian business came together to discuss the issues with EU Commissioner László Andor, Economics Professor Zhang Weiying (Guanghua School of Management, Peking University), top executive Dr. Andreas Ludwig (Umdasch AG), capitalism critic Christian Felber (Attac Austria) and the strategy consultancy's founder and Chairman Prof. Dr. h.c. Roland Berger.
"Although we seem to have got over the economic crisis, there is instability in the established economic, financial and social systems as well as in our social and political structures. And this instability leads decision-makers in business and politics to question whether and in what form growth will still be possible in the future," said Rupert Petry, Managing Partner at Roland Berger Strategy Consultants' Vienna office, introducing the evening's topic. While the dominance of market-oriented GDP was universally palpable, it is now increasingly being called into question as the measure of economic success. "An economic policy geared solely to pushing up GDP ignores not only ecological factors but also the question of wealth distribution and a population's happiness. This is why more and more countries are developing new indicators that allow material living standards, environmental quality, educational opportunities, life expectancy, social security and personal happiness to be factored in," explained Partner Roland Falb in his introductory remarks.
Europe leading the way in alternative growth indicators
At the end of 2007 – before the global crisis had broken out – the European Union had already recognized the limits of GDP as the sole measure of economic success, explained László Andor, European Commissioner for Employment, Social Affairs and Inclusion. The EU criticized GDP as a measure that emphasizes short-term economic activity rather than sustainable development and called for the introduction of additional wealth indicators. This view had, he said, been reflected in the "Europe 2020", the Union's agenda for smart and inclusive growth presented in 2010. "Recent decisions in Europe underline our determination to work for more employment and growth and to do everything we can to promote economic recovery. We mustn't leave anyone behind if we want to emerge stronger from the crisis," said Andor.
China: from growth at any price to sustainable development
In its current five-year plan, China is completing a turn from quantitative growth to qualitative development, explained Professor Zhang Weiying, from the Guanghua School of Management at Peking University. At over 11%, GDP growth to date is almost twice the target envisaged by the government. He said that the unflagging push for higher GDP was now presenting China with serious problems. The environment is suffering, the economy is getting out of balance, and the income gap between rich and poor continues to widen. "Efforts to restore the economic balance are based on raising resource efficiency and boosting domestic demand," he said.
Alternatives to GDP and the limits of reform
The ensuing panel discussion centered on alternatives to growth. Professor Roland Berger said it was wrong to give the concept of growth a negative connotation. Only steady economic growth would lead to more employment and give growing numbers of people opportunities to raise their incomes. Growth enables a better and happier life. Even if GDP retains its validity as a parameter, Berger sees scope for adjustment: "I can certainly imagine supplementing GDP with indicators like subjective life-satisfaction, objective life-satisfaction, social cohesion, environmental quality, resource efficiency and institutional quality," said Berger.
From an opposing position, Attac spokesperson Christian Felber argued for a completely new economic system: "88% of Germans and 90% of Austrians would like a new economic order. The model of a 'common welfare economy' aims at overcoming these contradictions by changing direction at the heart of the system and enabling individual economic actors to switch from the pursuit of self-interest to the prioritization of the common good." The common good should no longer, he said, be just a desirable side effect of the individual pursuit of advantages but the actual purpose of economic activity. "Integrated concepts like social and environmental accounting, EMAS and ISO norms, quality management and balanced-scorecard systems should be cohesively bundled to form a legally binding ethical tool," Felber demanded.
The view from the practical side of the issue was presented by Andreas Ludwig. He argued for making actions on sustainability more integral incentives for corporate managers. He adopted a pragmatic stance on the question of GDP add-ons and alternative economic systems: "There seems to be no disagreement between us on the objective, but there are very different ideas on the best path to follow."
