Growth doesn't just have a height, but a direction. Is our answer to the polycrisis, in a sense, green modernization, now done right?
Yes, thank you very much for the kind introductory words. It's great that you're all here. We've divided this up a bit, right? We're both big-picture people, but we said I would cover the polycrisis again. Above all, we also said, what is actually old? What is actually perhaps new? And how do we not let the old be pushed away, as if it were no longer so important just because the new is now coming to the forefront, for example, the entire planetary and the Earth's supply system versus some crazy fantasies that you could somehow build everything better in space. In principle, I oriented myself exactly on these two questions: What is new in this polycrisis, and which levers are central so that we don't let ourselves be so strongly misoriented, but instead clearly align this compass, so that we can then discuss concrete measures with Adam later.
I always like to use the World Economic Forum's Global Risk Rankings every year. It's a purely survey-based survey, but it naturally gives an impression of what is being discussed in the so-called executive suites worldwide, what the major challenges or threats to supply security are. And it's always asked about the medium term and over 10 years. And what we've seen in the last, well, actually 8 to 10 years is that this green topic, which is also nicely color-coded for the planet, has been moving further and further up. And I also find it just as important, when you look at what the number one topic is in the short term, this whole geo-economics as a buzzword that is currently being carried around. When you think about it, by the way, that's not me, the one wobbling, but thanks anyway for zooming in. I just thought I had done something here. So when we think about where this term comes from, it's something geographical. It's an earth-bound reading of the economy. And the term was coined, I learned this from Christoph Hein, who wrote a whole book about it, 100 years ago, and by two people simultaneously. As is sometimes the case, the observations are identical. But there are two different conclusions. And one was Haushofer, who said, yes, resources are limited, and thinking territorially is therefore necessary, and acting imperially is therefore a logical consequence for strong actors. And then there was also Wilhelm Röpke, who said, yes, resources are limited, yes, we have divided up territories. From this consequence, we should start cooperating so that as many people as possible can trade and advance together with these limited resources. Wilhelm Röpke did not stay in Germany. We saw the entire consequence, not just the imperial, but also a very destructive and inhumane form. What I find terrible is that the term 'Lebensraum' (living space) was therefore also somewhat ruined by Hitler, because I actually really like it and I've always asked myself, when can we take back terms? Because I actually think it's a wonderful way to think about what it's really about when we talk about infrastructure, etc. And right now, I'm just unsure because these 100 years ago are such a demarcation for all of us, as we also observe how people are apparently allowed to treat each other again in our society.
But what is important for me to make clear is that this geo-economics is nothing else, but another term for the same insight. And the challenge is that we can bring Wilhelm Röpke back to the forefront, instead of saying that the strongest answer is the one that should prevail. That is, of course, one that we must defend against Donald Trump, because if you look at how entire territories are annexed, we need that, you have to understand, or of course also the negotiation with Putin about who actually gets the resources in Ukraine. That is, of course, all an expression of a very imperial reading of this. And that's why I think it's still incredibly important to say that with these planetary boundaries, it's not some nonsense and hugging trees, but this is security policy. And I think it's important that this is also discussed at the Munich Security Conference, and I think it's totally important that we consider whether the Green Deal is still the right word to capture the European intention, to say that we want to try to see if we can't reduce the pressure on resources, and thus the necessity to deal with them more and more conflictually over who gets them, with a circular economy and with decarbonization, which was the idea behind this development model. So it's actually an offer of conflict reduction, and therefore it's important to stick to it and defend it against this whole narrative and the pressure, especially from the USA. The Handelsblatt recently did a good job of analyzing how the EU's sustainability reporting strategies, but of course also explicitly the digital regulations, are being targeted. And a letter was already drafted with Qatar, saying, come on, you've now taken all the LNG from us when you wanted to get away from Putin's gas, but if you want to maintain this regulation, we're not sure if the deliveries might have to go elsewhere. So it's blackmail, and that's why it's so important to consider why this step must eventually come to say we can't let ourselves be blackmailed any further, but we must push back, and offensively and with clarity that what the USA is doing right now doesn't bring growth, productivity increases, competitiveness, etc., but is a race to the bottom. Teresa Ribera, our Green Deal Commissioner, put it well: 'We cannot win a race to the bottom,' and therefore we must not let ourselves be pushed back accordingly. These are not soft topics. They are not topics that have nothing to do with us, and they are not topics that have nothing to do with economics.
The most important actors, from my perspective at the moment, when I try to push the topic forward, are reinsurers and insurance companies, or banks that grant long-term loans and clearly state, either you get a handle on the climate risks and continue to take them seriously, or it will eventually become difficult with lending. I was in Copenhagen a few weeks ago, and in Denmark there are now first regions where infrastructure and real estate are no longer insured because it is clear there that the heat development will lead to a bottleneck in water supply. This means that this idea of financial capital being able to move through reinsurance into loans has something to do with nature and the state of this nature. And the other question I always like to ask is, what percentage of GDP is directly dependent on biodiversity and ecosystem services? You probably know this, right? What would you guess? What number? Percent? About 60. And these are not the numbers from Greenpeace, but from UBS or, at times, the ECB, which said in a survey that of the 4,200 companies in Europe they looked at to assess biodiversity risks, 72% were directly affected. This means that this search we've had for a long time, can we translate ecological change into economic expressions, is something we must continue to defend. And on the other hand, of course, we have to be careful, that will be the next point, that we don't invite financial capital to say these are now the short assets, the things we will definitely need in the future, as we already see with oil, the basic supply, as we see with land, as we have seen with grain, people depend on it. And if I then own these stocks while they are shrinking, then I naturally have the opportunity to claim, well, if prices rise, that's just a sign that the markets are currently allowing it. We've seen a bit of this with the military recently. I don't think that companies financed by states, by our tax money, need to slap a 28% margin on their ammunition. Just as little as this fuel discount simply runs into their pockets. Greenpeace just calculated it: 700 million past the gas station into dividends. So the question is how we deal with this so that it doesn't lead to price increases, but rather the search is how we should overall clarify property and access questions so that reduction in how much we need for good supply security can go down, but access opportunities remain for as many people as possible, and neither is favored by a purchasing-power-oriented, financial-market-driven development, as we particularly experience from the USA.
And the next point that is so important to me, also from this Global Risk Report, which has been emphasized by many for a long time but is currently under just as much pressure again, when we look at the debate in Germany in particular, is this question of inequality. Currently, it's only about saying we can no longer redistribute so much, without asking why the distribution even went in this direction in the first place. Including, of course, the wealth transfer to the top 1%, which has risen rapidly again in the last, well, 5 to 6 years. And the processes I just described are naturally part of why this happens. If I only increase my money through investments in perhaps these limited goods and assets and am no longer productively active or let myself be remunerated for work, then I can actually set myself apart well from the others, because the taxation of financial capital is different and because it can now influence with much greater force in many countries what can even be politically enforced there. We are all now being asked to do pension provision with ETFs. If you look at what the standards of MSCI, which is the largest company and pushes billions around with ETFs, what pressure they can exert on countries that want to call themselves emerging markets or want to move up a class. These are very clear statements about what is possible there and what investor protection must be given so that they can actually get into these indices. This means that steering money sets conditions, and these are of course actors who are not legitimized and where we currently also have no counter-power in that form. And that's why what we currently see is highly uneconomic growth. The term was, in my view, I don't know, maybe someone before me, but Herman Daly particularly strongly shaped it, who said that at some point it tips, then we might still be recording growth in GDP, but actually what is accumulating in terms of so-called externalities, i.e., value destruction, is already more expensive than what we are gaining. We just don't record it. And with nature, it's of course often the case that we don't see it either. Climate gases are so hard to grasp. We don't see them, we don't hear them, we don't feel them, we can't even smell them. And yet they are naturally part of the change of what we will find in the future. And that's why we need something like a CO2 price to be able to ground it at all, to make it tangible for economic actors at all. The moment it is supposed to happen, we see that it's said, ah, but we can't afford that. And then suddenly the inequality question is raised and one remembers that some people no longer have such strong purchasing power, but these few who earn little in a society were never really on the radar of the actors who then suddenly discover them. And that's why the social and the ecological always go together, trying to resolve them, and from my perspective, clearly standing up against it when it's said there is a natural trade-off between social and ecological goals. No, it's a design failure, both of the economic instruments and of the offers of how we have organized infrastructure, public services, etc. That could be done differently, and that is of course exactly the search for where we need to go.
What is new in this situation? And that is, of course, the digital possibility. And I'm currently really angry because that was a report we submitted in 2019, when I was still Secretary General of the Scientific Advisory Board on Global Environmental Change. And we said, let's take a look at digitalization, and what do you ecologists want with that? And then we said, exactly that, that ecologists and techies finally talk to each other, because theoretically, what is now newly possible, right? Sensors, automation, monitoring on a very large scale, but also extrapolation, simulation, all such things could really help us to finally address the breaking points of sustainability. I can predict tipping points in ecosystems, for example. I can help farmers measure how much water is stored in the soil and how much isn't. I can then also remotely control the smart grids topic of renewable energy and calibrate consumption and supply well against each other, so that, for example, electricity prices are lowered. So I heard a lot of great potential for application. And we said there are therefore three dynamics. First, to consider how digitalization can be used for sustainability goals, but also to make digitalization itself sustainable, i.e., energy efficiency, orientation, etc. And the second is really to say it has a societal impact that we see much more today than we would have thought back then. And the third is also this question, who are we humans actually? How do we actually want to live together on this planet? Because we then started to think, is it utopian or dystopian where digitalization is heading? And back then we realized there are two completely different interpretations. There is the possibility that it ends up utopian, which would be that we really manage to put planetary boundaries in focus, to say we are now creating this renewable energy transition, we are now really thinking about energy return on investment is a great indicator to say these will be the infrastructures of the future, but also agriculture, building up the Earth's soils, etc. The next is then of course a new humanism, access to much more knowledge, to communication. That was also the dream of the internet at the beginning, that you could talk directly across all borders in real time. And then of course these connections, a bit of a dream that everyone now understands that the Earth is a large organism and that we live embedded in it. So in the education sector, completely different possibilities. And a culture of cooperation, the sharing economy, is also a part of what was strongly improved by digital platforms, as they were originally designed. eBay, carpooling, couchsurfing, before it became Airbnb. All of these were possibilities to say, hey, we might need fewer resources because we can distribute access more broadly. And then of course this idea, in which direction is this going with this humanity? Can we actually say we get a completely different consciousness, a completely different access to knowledge, cultural understanding, etc.
And then there is also the dystopian variant, and that was of course to say, you take the whole thing more as an accelerant. You build a lot of data centers with an incredible amount of energy hunger. You concentrate more and more control over limited resources because you can also monitor particularly well. Where are the most fertile soils or the thickest forests? And then of course the idea, can't you also use this to manipulate information or make people dependent on some online payment systems? In China it has gone the furthest, but in the USA we are also on a good path where you do everything only via your smartphone, from payment to your ID, etc. And then you are of course very exposed to those who have access to it if necessary. We also see it with the Trump administration, which personally sanctions judges or our really great champions at Human Rights Watch by saying, zap, sorry, your payment service provider is no longer available to you. That's why we are now discussing sovereignty, digital sovereignty, and of course we are also discussing who is actually driving such a dystopian agenda. And there is transhumanism and this whole, yes, the Antichrist from Peter Thiel or on Mars is also great from Elon Musk or the superintelligence, where we then somehow merge like cyborgs, are naturally part of this vision. And I sometimes have the feeling that bored guys with a competitive complex and way too much money are not good at driving the seed of future infrastructure design. That's why the question is, how can we get out of there? I'm a bit with these levers and also where friction comes in, because for a moment it felt like, how can we even stop this, and that's how they presented themselves after the Trump election. But now we see that around these data centers, a bipartisan movement is emerging, Republicans and Democrats uniting, which is against these megalomaniacal infrastructures that are simply placed, and especially in precarious communities, and the water supplies, energy supplies, but also air pollution, of course without waiting for legal permits beforehand, simply presented as facts. This completely out-of-control hostile takeover, IPOs of 1.7 trillion, etc., and further and further this concentration, and further and further indeed Ponzi schemes, i.e., AI systems that only advance through debt and mutually supporting loans, if you look at where the productivity gains etc. come from. All of this has a lot to do with a few companies in the USA, and that is of course also a culture where we say, hm, there isn't much left to say it could be enough for everyone and we could possibly not use this AI to replace as many people as possible, the topic of productivity increase, but to consider which part of jobs should perhaps be taken over by robotics, automation, artificial intelligence to make it easier for people, but still keeping people and their well-being in focus and also their incomes, because otherwise there is also a completely unanswered question right now, who is supposed to buy all the stuff that is then so megalomaniacally productively produced from these companies. I don't know if the guys from the Masters of the Universe are even waiting for that anymore. I think for them it's primarily about getting the most money into their pockets in the short term. So the question is also, how do we get something more long-term thinking and which actors are suitable for that back into the economic debate.
And that's why it's very, very important to me, when we look at all these comparisons, Europe is falling behind and we have to do something different, and over there stock prices are rising and people are at least in the office 7 days a week and things like that. Maybe it's really time, and I find it on the one hand painful to see how willingly, also in the current journalistic system, the economy and how it is reported on, all the additions we had actually achieved in the last 20 years, that you don't just find growth per se great, but maybe say on the left and right, take ecological and social consequences into account. Growth doesn't just have a height, but a direction, that all of this slips away again, because that is a legitimizing language with it. And thus of course also the power of definition, what the economy of the future should be, is left to those who basically don't care much about our fellow humans and the planet. I would like to illustrate this with three or four examples. The first and most important for me is that the Trump administration and also those who, in the administration, not only stole data in a business-like style, DOGE has ensured that Elon now has them all on his private computers, but also actually destroys the data that could indicate these planetary boundaries and thus also strengthen movements in court. If I want to defend something as ecological justice, then I naturally need evidence that it has taken place. And that's exactly why it's so important at the moment when this data has been destroyed that empirical experiences replace it. And there are now protests, and I don't know, AOC introduced it very nicely in Congress, simply bringing a glass and showing how brown the water, the supposedly drinking water, has become in the regions where this data was actually built. This means that destroying data has not been enough, but it was of course part of the strategy. And destroying data is part of the strategy of how this clear view is to be pushed back again in the European Union, and even if they are to be removed from the balance sheets, from the reports, and so on, because we can't afford it right now. Actually, the European answer would be to say, it's nice if you say we're going back to the Middle Ages, then we stick to saying, no, here is the stronghold of the information age. We want information to be collected as well as possible and above all made widely available. And Enrico Letta, who has advocated for strengthening the single market in Europe, actually brought this in his report as a fifth freedom. And I have the feeling that defending it today is very important, a) to improve economic metrics and b) but indeed also to make other forms of resistance and objection legitimizable at all, because we clearly see, because people then also understand why which innovation perhaps makes sense and is not just an imposition, because they themselves come up with the idea, what could be the better solutions to actually bring the ecological and social together, and use this enlightenment, not AI etc., to make us all dumber. I find these reports about how the neural networks are shrinking, the more children in schools use ChatGPT as a simple answer machine, highly precarious, and that's where the degradation of biological beings like us and nature itself meets. There are simply certain logics of living systems that have to do with use, but also a rhythm of use that keeps them healthy. And to focus on that and then say, no, we have a different definition of competitiveness, high-road competitiveness, and it's about not explaining what it takes based on GDP, but that they have broader dashboard indicators, we've been there before, it's a bit crazy that you have to pull it out again now. I think it was 2011. And then it's of course clear that I try to monitor stocks. Natural capital, social capital, human capital, education, are people able to shape their future? And a term that I am currently trying to bring strongly into the debate and notice that it really helps those actors who actually want to stay on course but don't find it so easy to continue acting just as quickly in the face of counter-pressure, is this 'regrettables'. In economics, it is foreseen to say, yes, we know that GDP also includes expenses, for example, for cleaning up after a natural disaster, 40 billion in part, or a huge accident, people have to be paid for someone to clean up, or a hugely growing arms industry, we shouldn't celebrate that now as a new growth engine and these are the new ethical investments or start tinkering with taxonomies so that they are now actually included in sustainable investments. No, they remain regrettables, regrettable expenses that may be necessary in the short term today and where we should still all agree that it would be best if they were no longer needed as quickly as possible, because we could then put the energy, investments and resources into something that brings civil well-being forward, instead of into things that hopefully just have to stand around and if we have to use them, cause a lot of damage. This means we must remain clear in the numbers and in the narratives about what it's really about. Productivity, I have two more of these big terms that have just been introduced, then we'll discuss. Productivity measured in the USA not only drives people completely crazy now, also in the tech companies, tokenization. You have to use as much AI as you can in your own job, as you perform it, a) to make yourself replaceable and b) to train the language models, and then these jobs will eventually disappear. And that means productivity neither considers the people, but of course also not what we had with the data centers. And what AI consumes is something completely different than what IT consumed before. And there are many solutions where we can say shallow AI, a light, not particularly deep AI would be enough, and then we wouldn't have to increase this resource footprint so much, and we could actually consider how we manage to say in Europe that we want to bring sovereignty forward overall through a reduction in resource dependence. And the data revolution can of course be used exactly for better accounting of value destruction, but also value creation. Then I'm back at the beginning, but for that we would have to want it, and for that these actors would have to work together, and that was the program of the Capitals Coalition, and then we have a completely different idea of value creation and accounting, and then we would also have a completely different benchmark of successful business models, instead of letting ourselves be measured by those who are particularly effective at tax evasion, particularly effective at pulling up stock prices in Ponzi schemes, and now also, and it's important for me to say, in the USA, supported by a state-capitalist variant. We now have something like a digital-financial-military complex. Palantir has a price-earnings ratio of, I think, 400 or something. That's 10 to sometimes 20 times as much as Nvidia. I can only have that if everyone trusts that the world's biggest military will kick out the doubters or remain a customer. And that's why, last point, keep people at the center and say that is actually Tech for Earth, could be the European answer. Brian Arthur, evolutionary technology researcher, really fighting for which observations do I not come back from. So, with which observation, right? The topic is, with which knowledge and which phenomena do we want to shape the numbers and narratives on which we then invent technologies, and money is also a technology, to say we actually manage through these technologies better knowledge, better understanding of what can work, and then clearly stay on course in innovation. Which instruments we need for that, we can then gladly discuss, but it really remains a very, very central concern for me that we don't let ourselves be increasingly fooled by the removal of language and also the numerical frameworks.
