Post-mining as an example and process of economic evolution
Along with hunting and gathering, early forms of trade and craftwork and farming and forestry, mining has been one of the oldest professions recorded over the course of human history. Its development history as a branch of industry is therefore a lengthy one, as is reflected in the timeline of its changes and transformations, which have included many downturns and new beginnings (Figure 1).
At the same time, every mining operation is finite, no matter where it is in the world. For every deposit of raw material is confined and no mining activity can continue ad infinitum. It will, at the latest, end with the physical depletion of the target deposits, though will usually stop before this if the extraction and processing of the mineral in question no longer appear to be economically viable – in other words when the operation has ceased to be profitable or at least is failing to break even. This can happen, e. g., when the selling price of the raw material has fallen to such a level, or the production costs have risen to such an extent or threaten to do so, that the mining project is no longer worthwhile. In addition to these genuinely economic constraints there can also be political and legal restrictions that will force mining operations to close, e. g., for environmental protection reasons or, more recently, because of climate policy objectives. This means withdrawing the social license to operate, as occurred e. g., in the case of the German coal industry – which had long been subsidised, though this support was due to run out – at the final closure date in late 2018. The same applies in the case of the planned withdrawal from solid fuel, which will spell the end of the domestic lignite industry following the nationwide shutdown of solid fuel-based power generation by 2038 at the latest, and “ideally by 2030” according to current political commitments. At the time of writing it remains to be seen whether German energy policy will undergo some kind of revision in response to the recent geopolitical “turning point”. (1)
But it is not only solid fuel mining in Germany that is facing a potential end-date. The EU decarbonisation strategy and the European Green Deal, along with the associated Coal Regions in Transition Initiative and the EU’s Just Transition Mechanism that has been specifically created for it, are promoting a Europe-wide withdrawal from coal and lignite. All coal using and producing EU member states, along with several associated countries, have now signed up to this strategy by adopting national phase-out plans (2). As the EU’s most recent member state, and its largest coal producer to date, Poland has now also officially declared its intention to cease coal production by the year 2049. Similarly, at an international level, following the Paris Climate Conference and the agreement on a global target of climate neutrality by the middle of this century 70 organisations and some 48 countries so far, including Germany, have got together to form the Powering Past Coal Alliance (PPCA) whose declared aim is to “consign coal-fired power generation to history” as soon as possible. (3)
In its report Managing Coal Mine Closures (4) that was submitted at the Katowice Climate Change Conference at the end of 2018 the World Bank pointed out that over the previous half century, in spite of the enormous global growth in coal production and consumption, there had been substantial changes in the coal industry in many of the world’s coal mining regions. These had to a large extent led to colliery closures and job losses not just at individual mines but also on a region-wide basis, beginning in the 1950s mainly in western Europe, including Germany, and then since the 1990s in eastern Europe and Russia, and more recently in the USA and in some parts of China too, as well as in other major coal producing countries such as Australia and Indonesia. At the same time there were other strong and in some cases cumulative driving forces in operation around the world that indicate that both planned and disruptive colliery closures are likely to occur in the foreseeable future, with significant socio-economic and regional repercussions. This in turn increasingly raises the question of how a sustainable and just transition into the post-mining era can be organised for those affected.
Here the World Bank has essentially identified three driving forces behind these developments (5):
- Ongoing mechanisation and rationalisation of coal mining based on technical advances that have led to economic repression and the closure of less-productive mines.
- Tighter environmental, energy-related and climate-policy restrictions on coal utilisation (“Clean Air and Energy Policies”), whereby coal requirements and hence coal demand will be reduced.
- Energy market innovations as a result of which coal has been and will be exposed to increased competition through substitution from cheaper, cleaner and/or more climate-friendly competing fuels, the latter with a view to climate-policy requirements and CO₂ pricing.
This is what happened in earlier years due to the use of oil in the heating sector and in the carbon chemistry industry, while more recently natural gas has also had a similar impact both in the two aforementioned sectors and also for power generation. The electricity production industry also had nuclear power available as an alternative and from an international perspective – unlike the situation in Germany where the nuclear phase-out is due to be completed well before the withdrawal from coal – this will continue to be the case in some places or indeed is yet to happen, as is demonstrated in some of Germany’s neighbours such as France and Poland. New and renewable forms of energy will ultimately replace much of the coal consumed in the power production sector, though will also affect the CO₂-intensive hydrocarbons gas and oil, and the same will also apply to the chemicals industry and to the crude steel production sector and other primary industries with the advent of “green hydrogen”. The coal industry is but one example of how an entire mining sector can be subject to pressures of adjustment and phase-out that ultimately lead to its demise. This is exemplified by the 50-year process of adjustment and downsizing that the west-German coal industry went through, beginning with the formation of Ruhrkohle AG in 1968 as the unified company responsible for all mining operations in the Ruhr coalfield and the closure of the Bavarian, Aachen and Saar coalfields through to the final cessation of German coal production at the end of 2018 with the closure of the country’s last two collieries (Figure 2).
While the energy transition and climate policy have clearly provided an added impetus to various mineral mining sectors, and primarily to many metallic resources such as iron, copper, nickel and lithium, along with the rare-earth metals, which according to all forecasts and scenarios are in a global upturn, yet forces identical and similar to those that spelled the end of coal mining will also apply sooner or later to other mining sectors, such as the aforementioned extraction of other fossil energy resources. These forces will eventually lead to the closure of individual production sites in practically every sector of the mining industry and hence will pose the question of what will happen there after mining has gone and how can the post-mining landscape be organised. For “post-mining means everything that happens after raw material extraction proper has ceased” (6), this ranging from the responsible management of the environmental consequences and the inherited liabilities and eternity burdens of the now closed mining industry through to the sustainable exploitation of its legacies, which includes its real estate, installations and infrastructure and all the potential that is there for new economic activities. In this respect any post-mining scenario is a concrete example of economic evolution.
The blind spots of standard economic theory vis-à-vis the evolution processes
The author has already outlined elsewhere in some detail that the post-mining era constitutes a (new) research programme not only in terms of its geoscientific, scientific and engineering aspects but also for economic science and related disciplines, such as economic geography and urban planning (7). This does not conflict with the fact that a holistic and interdisciplinary research strategy has become virtually unavoidable for the post-mining era and its many facets (8). Nevertheless, it is astonishing how little effort economic science, of all things, and particularly its sub-discipline macroeconomics, has so far put into developing its own research programme against the backdrop of the long historical development of the mining industry and the inevitable question that will arise from it of “what comes after”, not to mention the foreseeable economic challenges of the post-mining world that exist now and for the future – and worldwide.
Firstly, this is clearly due to the fact that the transition from mining to post-mining is considered as part of the general economic process of structural change, the kind of thing that happens in every other branch of industry and therefore something that is already the subject of general economic structural research. While that is certainly true, nevertheless it tends to ignore certain sector-specific economic characteristics such as site-dependency, the physical predisposition of the resources (something inherent in the mining process) and the typical economic “backpack problem” of the post-mining era that is part of the whole story. (9)
Secondly, the standard economic theories still find it quite difficult to describe, and even more so to explain, the development processes involved here and the qualitative structural change taking place. In short: they are struggling to understand economic evolution. In his study of economic development the economist Helmut Arndt, who will later feature largely in this paper, expressly warned against an economic theory that was ahistorical and solely focused on equilibrium models and cycles, where “the object of the theoretical national economy shrinks to individualistic economic bartering” (10). This approach, he claims, would not be capable of interpreting market-based development and adaptation and so would ultimately prove “sterile”. He counters this with his own theory of evolutionary economics based on an economy that is dynamically shaped by people, where producers are not only made up of operations directors and business enterprises, who simply perform commercial optimisation tasks, but comprise entrepreneurs and managers who do the actual and creative economic work of “organising and shaping the business operations and the goods that are produced in them”. And their customers, the end-users of the economic goods, represent “not just living beings whose patterns of demand are forever fixed but (also) comprise responsible consumers – endowed with reason – who cultivate their needs and requirements and reconfigure their demand structures.” (11) In summary: economic developments are the result of human freedom not of mere mechanisms, and therefore they are not determinable.
The criticism aimed at the standard micro- and macroeconomic theory that prevailed at that time and still predominates today, and which he labels as “equilibrium and cycle theory”, is expressed by Arndt in very detailed terms and underpinned with the claim that economic theory had to be a “lesson in overcoming poverty and misery through the development of supply and demand” (12):
- With the standard theory being labelled as “spaceless and timeless” it is only able to provide selective explanations for spatial and temporal economic developments and changes. Neither do these models reflect the impact of expectations, that is to say assumptions about future events, e. g., whether new products will find a ready market as planned – and what kind of adaptations should be made if this does not happen.
- The standard theory is said to be focused on the doctrine of exchange and barter and is therefore more about “catallactics” than economics, i.e. it only involves given products and innate needs. Economic decisions are therefore optimised according to given cost and benefit curves that are backed by the so-called law of diminishing returns and the Gossen’s laws of diminishing marginal utility in consumption and/or by existing indifference curve systems. Changes in goods and in production methods, where factory productivity is increased and the law of diminishing returns can be overridden, cannot be explained in this way, no more than can the endogenous development of needs and desires and, with them, the emergence and collapse of markets.
- Equilibrium models require the regular input of “complete information” from all market players on all the factors that are relevant for the transaction. However this is said to be completely unrealistic, as information of this kind is generally distributed asymmetrically and “fraud and deceit” are fairly commonplace in a market situation.
- In these equilibrium models pricing is said to be downgraded to the level of a mechanism, or even to that of a “datum”, that is only suitable purely for adaption to the realities of the market and masks out all price configuration possibilities. Likewise, “profit” is accounted for as a “residual” that remains behind when conventional goods are (re-)produced in a given plant or factory. Arndt considers both to be unrealistic. Market prices in particular, he claims, are in reality never equilibrium prices but are always temporary balancing prices and the profits made by companies are performance outcomes that have been developed under risk.
- In the macroeconomic cycle models all parameters of intrinsically open developments, and their economic consequences, are said to be treated as “exogenous” and banished from the data cycle. Markets, demands, goods, production methods and hence the “technology” are taken for granted. Any pronouncement is therefore limited to the “sterile” reproduction of circular-flow economic relationships, or at best, and by adjusting the variables, to the degree of quantitative growth or shrinkage. But it cannot account for the emergence, the nature and the impact of new products, more efficient methods of production, changing needs and the new value choices of consumers and therefore neither can it expound the genuine sources of increases in real earnings or the recurring dissonance between supply and demand, which can also constitute the cause of cyclical fluctuations.
- The cardinal problem with the standard theory – and one that accounts for its special strengths while at the same time defining its central weakness – is its primary focus on quantities and their calculation while neglecting the qualitative aspects that underlie economic conditions and developments. This makes it seem like a “mathematical science”, as was originally claimed by Jevons in 1879 and subsequently quoted by Arndt, “simply because it involves quantities” – and Arndt describes this as a curtailment to “pure set theory”. The freedom and capacity of the participants to shape their economic environment is therefore disregarded. Economic laws would thus adopt an elegant, quantitative guise. While, according to Arndt, it would be just as necessary to have a quality-based “theory of development and adaptation in which businessmen have the freedom – which in real life already exists in market economies – to set aside the legal requirements so that companies can develop their businesses and their products and households can draw up their needs as they wish.” This is the only theory capable of undertaking a process analysis that can not only record measured values at different points in time but also take account of the changing value choices of the stakeholders and the development of qualities and assets on the economic stage.
The weak points in the standard economic theory, as presented by Arndt, certainly have substantial legitimacy and illustrate the resulting blind spots over economic evolutionary processes. Whether we can still really be fair to the standard theory in view of the criticisms put forward by Arndt is itself a moot point given the qualitative development of this discipline. And some of the points of criticism appear overdone even from the perspective of that time, as by now there have been quite a few ongoing developments in the standard theory. Take, e. g., the problematic area of market and competition malfunctions due to information asymmetry in respect of product quality, as in the case of the “Lemons Principle”, which was developed in 1970 by the subsequent US Nobel Prize winner Akerlof and since has been frequently cited in the standard theory (13). Meanwhile Arndt himself has acknowledged that there have been a number of new ideas put forward in the study of evolutionary economics, though did not consider these to be sufficiently appropriate, and he primarily based his own concept on the groundwork that was done in 1912 by Schumpeter in his “Theory of economic development”, where he assigns a paramount role to the dynamic and creative entrepreneur (14). However Schumpeter pursued a core question that was somewhat different from Arndt’s, namely the exposition of fluctuations in the economic cycle rather than that of markets and competitive processes. Schumpeter’s dynamic-evolutionary concept of the standard theory has also not really been developed any further. While it implies an endless speed of adjustment and comparative statics what he is advocating is not a true process theory.
One criticism of Arndt’s reproach is that even standard microeconomics with its methodical concepts was and is able to describe the processes of progress and adaptation to some extent and at the very least to formulate its economic prerequisites, as takes place in the market process theory and its market phase schema that was very much influenced by Arndt – and which has long been part of the standard teaching syllabus (Figure 3). (15)
Similarly overdone seems to be the criticism aimed at the standard macroeconomic theory, which in the fundamental growth theory operates in a very market-oriented way with macroeconomic supply and demand curves, something that Arndt considered to be too mechanistic, and in the modern endogenous growth theory, as developed particularly by the US economist and 2018 Nobel Prize winner Paul Romer, which places the emphasis on qualitative aspects such as the generation of new knowledge and skills (“human capital”) and new technologies as drivers of growth. The economic research into happiness and quality of life, and the impact of state policy on economic growth, from property rights and policies on education, research, health and trade to responsible government leadership and political stability, are all now part of the curriculum when it comes to growth-theory analysis. (16)
Since Arndt’s critical review the standard economic theory has now undergone a fundamental upgrade and adjustment based on New Institutional Economics, which addresses the issue, or at least seeks to, of how “real people in the real-world economy” attempt to solve and regulate key problems such as incomplete information, market power or external effects caused by the creation and composition of institutions, i.e. systems of behaviour-guiding rules and action systems that these control as based on guiding principles. The right of disposal concept, the principle agent theory and the transaction cost theory all provide explanatory modules for this. (17) This concerns and includes at least part of the qualitative questions of economic development that has been so picked apart by Arndt.
Meanwhile in the field of macroeconomics a separate line of research has now developed and grown rapidly since Arndt’s critical review. This expressly describes itself as “evolutionary economics”, distances itself from the standard theory and avowedly aspires to method diversity and transdisciplinarity. This later form of evolutionary economics not only picks up on some of the critical points that Arndt raised about the standard theory but also aspires both to enrich and even to revitalise economic thinking. (18) Like Arndt, this more recent school of thought in evolutionary economics primarily sees economics as a social science, that is to say it seeks to explain the coordination of human actions in large groups. To this end it differentiates from conventional economics, which it claims is only the “science of optimising the individual satisfaction of needs with limited resources (allocation and/or efficiency problem)”. Instead, this research concept places the main focus on the “knowledge problem” and sees the lack of understanding of economic opportunities and how to overcome this as the main economic problem. It therefore asks “how knowledge of needs and requirements, and about the opportunities available to satisfy them and the relevant technologies involved, can be obtained and how it changes and how alternatives can be chosen under the conditions of fundamental ignorance and the continuous generation of innovation. From this perspective the economy presents itself as a place where knowledge is generated and coordinated and one that is continuously changing (the problem of innovation and uncertainty).” (19) Admittedly it has to be noted that this concept of evolutionary economics has so far failed to leave its mark in the introductory textbooks and standard reference works for macroeconomics and has not in any way supplanted the standard theory. Nevertheless, this concept clearly addresses at least part of the critical points that have been outlined and seeks out new pathways and a different approach to the issue of economic evolution. It is regrettable that one of its earliest exponents, Helmut Arndt, who three decades ago promulgated the notion of evolutionary economics in Germany, is barely mentioned nowadays. This paper will attempt to rectify things.
Helmut Arndt: an early German evolutionary economist – life and career
Although now almost forgotten when it comes to public debate and specialist discussions Helmut Arndt (1911 – 1997) was one of the most prominent German economists of the post-war period, a man who frequently expressed forthright views during the debates that took place in those years on micro- and macroeconomics and on economic policy. His life’s work encompassed many different macroeconomic themes – ranging from currency and foreign trade issues to the economic aspects of the problems posed by displaced persons, refugees and integration in post-war Europe through to wages policy, the distribution of income and full employment in the 1980s – and he acted as a universal intellect in publishing papers that grappled with issues such as education policy and the theory of science. But his professional focus and main contribution was in market and competition theory. In this area he was a pioneer of evolutionary economics and it is for this reason that this paper will seek to examine and review his contribution and legacy.
The author of this paper, who in 1992 received a doctorate for a thesis about a central issue of competition theory and policy (20), came across the works of Helmut Arndt, as was inevitable, when researching this particular subject. This included one of his best-known books, which bore the almost programmatic title of “Market and Power” (21). What follows, however, will refer to his last great enterprise, his crowning late work that was drafted in 1992 and appeared in its second edition the following year as the “Textbook of economic development. The theory of evolutionary economics and its significance for economic and finance policy” (Figure 4). Reference should also be made to the third edition that was published by Verlag Duncker & Humblot in late 2021 as a posthumous tribute to mark the 110th birthday of Helmut Arndt. This comprised an unmodified reprint of the second editions and, by way of classification and acknowledgement, was supplemented by a foreword and introduction by Prof. em. Heinz-J. Bontrup. (22)
Before going into more detail of Arndt’s works and his prolific explanations of economic development – including the post-mining era – it is worth taking a look at his biography and his career in economic teaching in order to get a better understanding of what he was about. Helmut Hoyer Arndt was born into a family of lawyers in Königsberg in the year 1911. His older brother Adolf Arndt was a magistrate and lawyer and was later to become an SPD politician and Senator in Berlin. His father, Gustav Adolf Arndt, was a doctor of law, initially serving as a magistrate in Essen and then as a senior mining councillor and deputy head of the Mining Inspectorate at Halle. He produced a number of publications on mining, mining legislation and mining policy and took a post-doctoral qualification at Halle University in 1873 before being appointed extracurricular professor there in 1893, ultimately being made full professor of constitutional law in Königsberg in 1900. Helmut Arndt obviously assimilated his family’s academic drive, though mining did not feature in his subsequent career. Following his school leaving exams he studied philosophy and jurisprudence, first in Marburg and then in Berlin and Munich (in 1933 he was awarded his first doctorate in law). There then followed traineeships at a bank and in a trading house and then employment as a commercial clerk. In 1940 he was enlisted into the German army for war service, was temporarily held as a prisoner of war and subsequently returned home. That same year, when he was just 30 years old and with the Second World War in full progress, he started a new course of study – economics – at the University of Marburg, obtaining his degree there in 1943. By 1944 he had obtained a second doctorate (Dr. rer. pol.) in political science, working part-time as a tax lawyer at an auditing and trust agency. From 1945 to 1948 he was in charge of the student services association at Marburg University, taking a post-doctorate degree at the same time. In 1946 he was awarded the Venia Legendi for political economics and from then until 1951 worked as a private lecturer. Following guest professorships and visiting professorships in the USA (University of Syracuse) and Turkey (Istanbul) he was appointed as a full professor of economics at the Technical University of Darmstadt in 1954. In 1957, with the German “economic miracle” in full swing, he followed a call to the Free University (FU) of Berlin as a Professor for Pure Economics and Economic Policy, which he held until he retired in emeritus status in 1978 (this in conjunction with a visiting professorship at Oxford University in 1976/77). While at the FU he also took charge for a number of years of the then Institute for Concentration Research and additionally played an active role on several national and international expert committees, such as the Economic Association for Social Policy. In 1970 he was awarded the honorary title of Dr. rer. soc. oec. h. c. by Innsbruck University. There is no doubt that Helmut Arndt had a remarkable life for an economics professor. He managed to acquire an amazing wealth of personal and professional experience in a career that, though started relatively late, nevertheless proved to be purposeful, dedicated and very successful indeed.
This could explain why he warned quite early in his scientific works against the purely abstract and irrelevant theory of the “human economy” and denounced the then increasing mathematisation of the economic theory, consistent with the views of Eucken, as the “decline of economic thinking”. This, he claimed, meant losing touch with reality, while the ancillary science that mathematics provided for the benefit of economics would mutate to become an end in itself. “The engagement with mathematics, while it has proved to be valuable in itself and also important for natural science, is no preparation for economic thinking.” (23) Unlike the formal sciences of mathematics and statistics the science of economics is “like any real science a study of living beings, of people, animals and plants”. It therefore transforms itself with its subject matter in time, space and quality, especially in modern market economies, which are themselves the object of human actions. The phenomenon of economic power therefore had to be properly taken into account and, according to Arndt, Jevons – who drew a distinction between two types of science, namely the logistic and the mathematical – was therefore making a fundamental error in seeking to assign economics to the science of mathematics, whereas it really belonged in the first of these categories, as it certainly had to do with logics and the object of the investigation, namely “qualities”, could not be sufficiently comprehended by mathematical means. (24)
It was precisely for this reason that evolutionary economics was needed, even if only to supplement the traditional theory. Indeed other economists had also addressed this issue and Arndt refers to the fundamental work entitled “Evolutionary Theory of Economic Change” by Nelson and Winter (1982), who provided valuable insights into this area. However here he sees too great a dependence on the mechanisms of biology and the biological theory of evolution according to Darwin, which could not serve as a “model” for macroeconomics because it did not involve those “creative abilities that were peculiar only to human beings” and their social processes but only concerned the supply side of things. It therefore did not pay sufficient attention to the other side of the market, namely the demand side. (25)
Arndt was a determined market economist and in some respects even a radical one. At the heart of his economic thinking and his teaching of economic development lay entrepreneurship, consumer sovereignty and the competitive process as the founding principles of the market economy. He saw the market as an institution that granted the economic freedoms and options that were needed. (26) The economic order had to be aligned with a “competitive society”. As economic experience shows, this created quantitative and qualitative economic growth leading to the development of greater prosperity for all. This is why he argued for more market and more competition, wherever possible. Why in his Textbook of Economic Development he pleaded for the liberalisation of trade and commercial policy, for less bureaucracy, subsidy reduction and tax cuts. He was very critical, e. g., of income tax progression and though he accepted that this did contribute to more equitable distribution he also considered it as an obstacle to market development insofar as it reduced the incentives and the resources available for private investment. Generally speaking (excessively) high income tax and profits tax could be detrimental to development investment, while with taxes already at a high level any tax reductions would have a growth-promoting impact. He broached the issue of national debt only to the extent that it could suppress private investment. In fact this is not the case in economic crises caused by exogenous shocks – he naturally could not have predicted the financial crisis, the corona pandemic or the consequences of another European war. The global oil price crisis and its economic repercussions were in fact known to him, though he did not mention them in his Textbook.
His guiding principle initially sounds like the agenda of some kind of supply-side theorist or of the political trend known as “neo-liberalism”. However Arndt differs in some way from this. The record of his economic-policy recommendations makes no mention of the neo-liberal panacea of privatisation, and this is no coincidence. Private ownership of the means of production was for him an issue of minor importance and at best relevant only to small- and medium-sized enterprises. For large undertakings and stock corporations like VW, i. e., where ownership rights and authority of disposal are in any case largely separated, it did not come down to state shares and ownership structures but to whether these behaved in line with market and competition requirements and there was no state control over investment. He in no way criticised government responsibilities in areas such as internal and external security, the judicial system, pensions and healthcare provisions, education and research, in other words he recognised and acknowledged these services. He specifically referred to the task of maintaining and expanding the public infrastructure as being fundamental to economic development and likewise he agreed that the state had an important role to play when it came to environmental protection.
Moreover, for him “economic theories are only relevant when their (respective) requirements are met”. By the same token, he considered that economic policy recommendations were never timeless or universally valid but rather were temporary and situation-dependent and in this he also was referring to himself. He published his Textbook of Economic Development immediately after the re-unification of Germany, bringing as it did enormous economic consequences, including initially a huge increase in government expenditure. (His textbook also included an appendix entitled “Transformation: comparative statics or evolution?” that focused on a comparison of the west German economic miracle after 1948 with the re-unification of east and west Germany years later and in which he criticises the equating of the market economy and privatisation, which he claims would have not distinguished between companies and speculators. Instead of setting up a government agency to sell off the publicly-owned enterprises of the German Democratic Republic as quickly as possible these undertakings would have been better developed by companies that had been in state ownership for some time.) As a true market economist Arndt also constantly stressed the role and significance of both sides of the market, that is to say not just the supply side but the demand side too. An entire section of his Textbook is devoted to the “economic output of consumers” , which he considers is ignored by the standard theory. With their purchase decisions this group in a manner of speaking exercises a democratic vote on the range of products available and ultimately hold sway over the economic success of the producers. In macroeconomic terms this would require the mass income to increase at as constant a rate as possible and the established social state to remain efficient, even though Arndt warns against an “excess of social policy” for populist reasons and in favour of special interests. All the economic players – employers as well as employees – had to be equally involved in the economic success. As far as monetary policy was concerned he therefore wanted to see a stability-oriented increase in the money supply, by means of which supply and demand could develop as uniformly as possible in financial terms without causing a highly distorting inflation, let alone any deflation. At the same time Arndt called for a productivity-oriented development of real earnings as a general guideline for wages policy, that is to say increases in nominal wages that as well as compensating for inflation would on average match the full growth in productivity. Only by this means could supply and demand develop in economic harmony and cyclical fluctuations be kept in check. However this in turn assumes an equal distribution of bargaining power between the employers and the trade unions as well as their freedom of association. Arndt points out that the socially and economically damaging practices of exploitation, downgrading and wage squeezing that used to typify the labour market were only brought to an end by the trade union movement. By the same token, however, he also singled out excessive wage rises, i. e., those that exceeded any increase in productivity or inflationary adjustment, as a cause of unemployment.
For Arndt the preservation and promotion of competition was of fundamental economic importance at every level. He adopted a critical stance towards any economic power that restricted competition or compromised its development. In addition to unequivocal competitive constraints in the form of formal violations against the applicable competition laws, such as cartel formation and coordinated practices, he was also critical of material corruption on the goods market, the latter possibly comprising abuses of buyer power by retail groups. He therefore called for tough or tougher competition laws that would be both corrective and preventive in their protection of fair competition, particularly in controlling the increasing company concentration. The dangers these presented lay not only in the accumulation and misuse of market power but also existed on a political level in the form of the resultant financially-strong pressure groups and lobby activities that sought to promote certain vested economic interests. The simple neoclassic “Cournot monopoly” alone was not a viable benchmark for a practical competition policy and even the market formats proposed in the standard theory, or the concept of optimum competitive intensity as propounded by Kantzenbach, whereby “broad-based oligopolies with moderate product differentiation” should serve as a model, were rejected by Arndt as ineffective. In his view the standard theory had in general not done nearly enough to tackle the issue of economic power, power struggles and power strategies. It was never just a matter of the number of market players but in fact also involved the size relationships between them and the nature of these connections. Freedom of competition was the decisive factor. Unfair market power, on the other hand, would be present wherever companies could gain special advantages at the expense of other participants. “He who has the power is in reality in a position to compel his victim to make revaluations that are in his interest.” This could be the case in bilateral “control-dependency relationships” even where, technically speaking, other competitors exist. Arndt believed that safeguarding competition was a key role of the state, or in his words: “The competitive society is a state institution that serves the common good”. In this respect Helmut Arndt was no neo-liberal but rather an ordoliberal and pioneer of the social market economy.
Nevertheless, Arndt remained something of a solitary figure in German economics, someone who refused to be pigeon-holed – or as Bontrup would have it “a heterodox economist” and “scientific seeker”, who wittingly remained outside every camp and school of thought. One might even label him a lateral thinker, though this term has other and quite negative connotations in the present context.
The ordoliberal Helmut Arndt therefore emphatically distanced himself from Walter Eucken and his system of “transportation economics”, which serves as a conceptional basis for German ordoliberalism. However he did acknowledge Eucken’s “(indisputably) great service to our understanding of the relevance of economic systems” and very much valued the fact that “individual freedom” and the restriction of economic power were of “crucial concern” for him. However, he thought that Eucken’s hypothesis was too much rooted in market morphology, the ideal of full competition and the fixation on balances. The development of supply and demand and the quality of products and processes, along with competitive freedom and competition as a social process, were not given adequate attention by him. One key reason for this would have been that Eucken and his “Freiburg school” had bowed too much to the “neoclassic”, that is to say the microeconomic standard theory, as a basis for economic theory.
As far as his relationship with the standard or traditional theory of the neoclassic is concerned Arndt stands by the aforementioned criticism of standard economics, which he adds to explicitly in his Textbook with the suggestion that macroeconomics, as principally an economic theory of market competition as a social phenomenon, must basically be part of the social sciences and should not be understood or presented as a natural science. However, the neoclassic approach, with its excessive fixation on quantities, the suppression of the political framework in the data cycle and the tendency to treat the man-made economy, including the economic order, as a “natural event” and economic laws virtually as natural laws – in the same way as the Marxists did, whom Arndt did not deem worthy of further consideration apart from his repeated clear rejection of the socialistic planned economy – had simply strayed too far from this.
In spite of some initial inspiration and a certain amount of borrowing from Schumpeter’s theory of economic development Arndt consistently emphasised the differences in the former’s hypothesis. This not only had to do with the fact that Schumpeter, as already stated, primarily concentrated on explaining cyclical trends and not competitive processes, as Arndt did. The former had, in addition, only restricted his analysis to the supply side and had ignored demand development. And moreover he had only focused on development rather than on adjustment processes. As such he had adopted too mechanistic an approach to the economic cycle, although he first identified the creative capabilities of entrepreneurial people and the huge significance of “new combinations”, e. g., in production methods, for economic development. In doing so he gave significant momentum to evolutionary economics. However, Schumpeter very much underestimated the risks posed by monopolisation and trusts. Later he even considered that, in an age of economies dominated by major companies and corporations, automated economic development and the transition to socialism were almost inevitable. These were conclusions that according to Arndt should be utterly rejected.
Arndt also ultimately distanced himself from the macroeconomically oriented Keynesian school and the more recent growth theory, which he in part also describes as “neoclassic”, although for this he also names advocates of Keynesianism and the so-called neoclassic synthesis such as Harrod, Domar, Solow and Samuelson. With this school too he deplored the fixation on quantities, especially on quantitative growth and measurable productivity levels, while ignoring the qualitative aspects of market developments. Here too economic growth was comprehended as being far from reality, like a mechanism whose speed and impact remained constant and was therefore focused on sterile cycle systems. This theory system, he considered, also abstracted far too much from the actual economic order and the social and cultural circumstances under which the growth processes actually took place and which were not predictable or calculable. Arndt believed that Keynesian “remedies” such as credit-financed spending programmes or targeted tax-based redistribution measures in support of low-income earners with a higher consumption ratio were only justifiable and advisable for stimulating growth in situations of economic depression – as in the global economic crisis of the 1930s, for which Keynes with his General Theory wanted to develop a counter concept – or deep recession, which actually resemble the conditions of stationary cycles, but were not suitable for a developing and growing market economy
Because of these significant distinctions, and probably also because he emphatically and obstinately adhered to the technical terms and concepts that he himself had coined outside the mainstream and at the same time was harsh in his criticism of many other proponents and of economic policy practices (using words like “ignorance”, “negligence” and “aberration”), the reaction he received from other professionals and policy makers was always fairly restrained. His impact remains low-key to this day, which is a pity, as he has much to offer us when it comes to the exposition and interpretation of the economic evolution.
Evolutionary economics according to Arndt’s Textbook of Economic Development
According to Arndt economic evolution in the sense of economic change, which leads to ongoing development and innovation (mutation) or to structural shifts and the displacement (selection) of products, production methods and producers and hence to a more efficient re-combination of resources, mainly arises through the qualitative development and adaptation processes that take place on the markets. Purely quantitative changes and changes in the division of labour, which are the primary object of traditional economics, follow these creative processes but are not their causal core.
Arndt believed that competition, which for him was characterised by a dynamic action-reaction model, was the main driver of this evolution. In his terminology this means the actions of the “pioneers” who bring new developments to the market – Arndt calls these new developments “novelties”, though in technical jargon the term “innovations” has now been adopted for this – and the reaction of the “imitators” who are enticed when the novelties prove to be economically lucrative and profitable from a supplier’s point of view or, from a buyer’s perspective, appear to be more useful than previous offerings. The market structures therefore fluctuate in a processual manner between the extreme of initial pioneer and performance monopolies and the other extreme of the “isopoly” with fully uniformly distributed market shares, as would be the case with the polypoly in the standard model of full competition, which is also labelled as “sleeper competition” and is even said to represent an extreme form and not the normal reality. Between these, competition was compatible with every market form and structure as long as and to the extent that the process is not compromised. This competitive process triggers both “development competition” and “adjustment competition”. While adjustment competition leads to “scarcity and shortage processes” that remedy deficiencies in the market supply or reduce surpluses, something that is described in the main in the traditional “neoclassic” market theory, and that after interim changes in capacity utilisation over time are accompanied by corresponding expansion investment or by a disinvestment in production capacity, development competition is in actual fact the decisive economic driving force. In this regard Arndt pointed out that new developments do not arise, as is often maintained, as a result of technical progress in itself, though this does produce many things that may never become established on the market, or at least never to an equal degree, but that it is only economic creativity and the creative management of companies that make innovations marketable and competitive, along with the willingness and capability of consumers to accept these new products and to enable them to evolve. Moreover, competition was not, as the Austrian economist and pioneer of neoliberalism Friedrich August von Hayek described it, originally a “process of discovery” but rather was a social process in which the discovery of the respective benefits of the novelties by the producers and consumers happens of its own accord, provided that this is not restricted by excessive power on one side or another of the market or by state dirigisme.
In this context, according to Arndt, competition fulfils three central and interlinked evolutionary functions (Figure 5). The first, namely the “development function”, he further subdivides into the “novelty function” (the development of new products and processes), which causes companies to engage in “development investment” (research and development activities in the widest sense) and into the “productivity function” (operational productivity improvements through the use of novelties), which encourages companies to engage in appropriate rationalisation investment. Imitation and proliferation then create the “socialisation function”, this comprising a “generalisation function”, where a relatively large number of imitators take over the novelties and generalise the new qualities that can be attained on the market, and a specific “income function”, which results from the fact that, on one hand, profit income can be realised and, on another, more efficient production methods result in a general reduction in costs and prices, which in turn leads to an increase in real earnings. Somewhere in between, so to speak, is the adjustment competition with its adaptive functions, as referred-to above, which through changes in output and in capacity levels bring about the qualitative and quantitative scarcities and shortages required by the market.
What must also be basically borne in mind, according to Arndt, is that contrary to what is stated in many textbooks that are still in common use today competitive processes not only take place on the supply side but that there is always supply and demand competition and this must always remain so if the competitive functions are to be met. In the case of supply-side competition he distinguishes between an “individualisation phase”, in which creative companies, the pioneers so to speak, gain a special position or a head start through new product qualities or more efficient methods and the “socialisation and generalisation phase” that ensues when there is unrestricted competition, in which the imitators present in the producer group eventually nullify and level out this competitive advantage. Ordinarily a “creative or prestige phase” will then take place similar to that of demand-led competition, in which individual buyers will obtain a special position through the purchase and use of the novelties, before a “generalisation phase” sets in on the demand side too through mass demand and the special position is levelled off.
Arndt also identified another particular form of competition in what he called the “demise competition”, where supply markets or segments shrink or disappear completely because their products are no longer requested or sought after – the other side of the “novelty coin” so to speak – and supply then continuously outweighs demand. The manufacturing capacity in question is then ultimately run down due to an absence of re-investment or a disinvestment until the entire production base is finally scrapped. Companies in this category either go out of business or restructure themselves to a different line of production. This demise competition is necessary from a market economy perspective because otherwise products would continue to be manufactured for which sufficient demand no longer existed and factors of production would be squandered that, if employed at another place, would operate more efficiently and raise overall prosperity levels.
Something similar, though not necessarily leading to a demise, would apply in the case of “rationalisation competition”, which existed in a number of forms and in which more rational, that is to say more efficient, production and marketing methods are used to improve productivity as a means of competition. Rationalisation competition is not possible without novelty competition as it requires qualitatively new capital goods, that is to say the processes and means of production. In this way companies are able to gain competitive cost advantages or set these off against their competitors. These cost reductions are then either passed on to customers in the form of lower prices and/or enable higher wages to be paid to the company employees, provided bargaining power on the labour market is evenly enough divided between the social partners. That was the undisputedly social side of competition. At the same time this rationalisation competition consolidates and intensifies the novelty competition for new product qualities and drives the competition process and hence the economic evolution forward. However – and this is occasionally its unavoidable downside – rationalisation competition often strips away a share of the existing jobs, even though it may serve to secure others. In contrast, novelty competition with its development investment and adjustment competition in the scarcity process and the expansion investment that is needed for this are associated with the creation of new job opportunities. If the novelty effects and rationalisation effects approximately cancel each other out there will on balance be no job losses. However, if the rationalisation measures outweigh the novelty effects, e. g., due to previous inordinate cost increases, or if improvements in productivity are not passed on in the form of price cuts to customers or wage increases to employees due to excessive or unilateral market power, and as a result of which the purchasing power of the demand side does not keep pace with the supply trend, then the result will be job losses and sales crises.
In the light of this Arndt held that the strict distinction generally made in economic theory between microeconomics and macroeconomics was largely an artificial one. Macro-phenomena, he stated, had for the most part microeconomic causes, apart from when currency circulation was controlled by monetary policy. Disrupted development in competition and discrepancies between supply and demand were usually also the root cause of economic crises, sluggish growth and unemployment. Miscalculations and maladjustments were always possible on both the supply side and the demand side and could cause erratic developments on a national economic level, just as could changing preferences and lifestyles on the part of the consumers. Conversely, changes in the macroeconomic framework conditions could lead to malfunctions in the economic development of the markets or could eliminate them. Moreover, investments and adjustments did not just hinge on objective quantities alone but on subjective expectations. It was therefore always important, in economic policy terms, that the state should not undermine expectations and should support society’s receptiveness to competition and technological innovation. In this context Arndt coined the term the “development elasticity of supply and demand”, which describes the readiness of supply and demand to respond to qualitative innovations on the markets. This should not be confused with the parameters that relate to the price elasticity of supply and demand, which are well known in standard economic theory.
According to Arndt a number of “competition prerequisites”, which have to be guaranteed by the state, must be put in place if the competitive process is properly to fulfil its functions for the benefit of economic development. First and foremost among these is the provision of sufficient “economic freedoms” in terms of legal freedom of choice and freedom of action (commercial freedom etc.). In material terms it also came down to the “freedom of partner selection” in competition (contractual freedom alone only provided the formal basis for this), which was also linked to quantitative and qualitative requirements. Quantitatively it comes down to an adequate number of options among the competitors, which is compromised by too high a concentration of suppliers or buyers and favoured by a high degree of market openness, meaning no major barriers to market access for potential competitors. Qualitatively, freedom of partner selection was dependent on the power imbalance between the partners and the compulsive nature of their relationships (as is apparent in the case of exclusivity clauses and tying contracts). Considerable parts of Arndt’s Textbook read like an anatomy of power structures and strategies that can be used to suppress the freedom of partner selection. It would be beyond the scope of this paper to go into this in any more detail. The same applies to his extensive observations on foreign trade, which he also discussed primarily with reference to its impact on competition. On the other hand he made little explicit mention, as has critically been pointed out, of potential manifestations of market or competition failure beyond the problem of power balance.
Arndt considered that the competition requisites also included having sufficient incentives for producers and consumers for them to participate in the competition process, such as profit opportunities and price advantages. For companies profit incentives in this case played a key role as a “reward” for successful production services and investments. State measures or market constellations, through which profit incentives were severely disadvantaged, were therefore viewed critically by Arndt as far as economic development was concerned. One competition requisite, which in reality is of real significance, was also characterised by Arndt as the “capacity and willingness to defend one’s own interests”. Without these requisites even economic stakeholders with legitimate claims in a competitive society would find it hard to assert themselves against competitors and opponents and also against the state and a pluralistic public. Elsewhere Arndt underlines the importance of a “businessman’s competitiveness and readiness to compete” in terms of competitive intensity, which in turn was not primarily determined by the number of players but by their quality. This quality was dependent on the company’s size, as an expression of its financial and/or competitive strength, as well as on its competitive spirit, its ability to adapt and, above all, its readiness to work creatively. Only then would it be capable of real development competition rather than just being a “pretend competitor”.
The economic “added value” that Arndt spoke about is also relevant for the economic evolution that is controlled by competition. Arndt accuses the neoclassic of having simply blanked out the concept and the question of added value and in doing so of having consigned its interpretation merely to the definition of Marxism, according to which added value is understood as the rate of exploitation of work by capitalist employers in a sterile closed-loop economy. However, true economic added value in a developing market economy was generated by a growth in productivity and should be measured by increases in per capita income. In a similar vein he criticises the Keynesian multiplier-accelerator model that describes the impact of additional investment expenditure on the growth of national income and employment, but which according to Arndt only provides a “mechanistic” explanation. He claims that a “static” and “sterile” closed-loop model cannot account for the entire economic added value, which arises as a result of development investment in a market economy. He contrasts this with his own “competition and development multiplier” that he derives statistically from the annual growth rates in economic productivity as measured by the rise in real incomes, which he states will in the long run lead to a progressive development in economic growth, as the recent economic history of market economy-based countries clearly confirmed.
Arndt fully recognised the drawbacks of economic growth for the natural environment, even though catchwords like sustainability and climate protection did not figure in his writings and were not yet in common usage. However Arndt did at that time address a number of current global environment problems, such as the hole in the ozone layer and the deforestation of the tropical rainforests, along with the “Limits to Growth” study that Meadows produced for the Club of Rome. In this he saw serious risks for mankind, though believed that these could and had to be overcome with new technologies and modes of production, with the best chances for this lying with market-based developments. At the same time he showed himself to be optimistic that the policy makers would ultimately live up to their responsibilities and create the framework conditions that were needed. He left open the question of how this should best be achieved. There is no doubt that today he would have preferred market-conforming instruments such as carbon pricing and emissions trading over more regulatory and interventionist measures. Of course these topics, which are so much discussed today, had not yet appeared on the horizon. Nevertheless, in this context it is interesting that for the transport sector, i. e., he discussed the incentive effect of special excise duties and the motor vehicle tax. Fiscal incentives, e. g.,, could be used to shift heavy-goods transports from road to rail, a move that would reduce accident rates and benefit environmental protection in equal measure. An appropriate structuring of the vehicle road tax would specifically promote low-emission vehicles and, as Arndt was already claiming back in 1992, support e-Mobility – economic observations that were to come true 30 years later.
Arndt did not specifically write about the particular economic challenges facing the mining industry, let alone those that confront post-mining society. His Textbook only once mentions the coal deposits as a former economic asset of the Ruhr area, adding that this had been lost under pressure of competition from cheaper imported fuels (27). He made no reference to the kind of special development and adjustment processes and opportunities that were available, or that could be made available, after the closure of the German coal industry. Nevertheless a number of conclusions can be drawn in this regard based on his thinking.
Implications of Arndt’s Textbook of Economic Development for post-mining society
Arndt’s Textbook of Economic Development is certainly no magic economic formula for successful and sustainable structural change, either for the post-mining era or for other branches of industry. But it does explain where the focus for this should be from an economic perspective. One of the terms used in Arndt’s Textbook also has a key role to play for post-mining society and that is “development investment”. If former coalfield regions are to enjoy a bright future after years of coal mining all kinds of investment measures will be needed to develop the legacies of the mining industry. This will initially entail all the safeguards and precautionary measures that have to be put in place at and around former mining sites in order to protect the environment, along with the remediation and monitoring of contaminated land, possibly involving provisions designed to meet perpetual obligations, the preparation and development of industrial real estate, buildings, infrastructure and all other remaining installations for potential re-use projects and the creative new business models that will have to be developed for this.
This will require companies that are ready and able not just to fulfil their legally binding responsibilities and other obligations in respect of the environmentally compatible and socially responsible closure of mining facilities, and in so doing to engage in an organised “demise competition”, so to speak, but also to become creatively active at former mining sites, including opening them up or handing them over to other undertakings. It does not necessarily have to be private enterprises or the previous mine operators but can in fact be state agencies or companies from other sectors that carry out these tasks. Indeed the inclusion and involvement of mining companies that had hitherto been active at the sites in question, provided that these enterprises still exist, will be at the very least a significant advantage as they will have specific locational know-how and may possibly already have prior experience of projects of this kind, and as proprietors will naturally have a special interest in the commercial utilisation of the assets in question. And firm development investment will be required, whatever the scenario.
In accordance with Arndt it has to be added that it is not only the concerns of the companies that have to be duly taken into consideration but that the employees have to be adequately accounted for too, as socially acceptable solutions must be found for outgoing mineworkers, such as adequate early retirement schemes for older men and proper training support and placement services for the others. The labour factor also has to be further developed and this requires the right perspective for developing the sector, along with financing options and the involvement of the social partners.
Arndt also emphasised the element of location competition and this is something that post-mining sites will inevitably have to address as it is extremely relevant for their future development. This means offsetting particular economic burdens, finding creative solutions for location-related problems and making the best use of the specific strengths and opportunities of the site in question. In times when commercial space is in short supply previously used industrial sites with existing infrastructure can in themselves offer comparative benefits. However all this has to go hand in hand with the capacity and readiness to compete.
To achieve this also requires what Arndt referred-to as “incentives”. For those companies that are keen to move in the location development must be attractive and, more importantly, should promise a good rate of return and any advantages present in the form of cost, position or image need to be identified and exploited to the full. This assumes, e. g., that the economic burden presented by a former mining site in the form of inherited waste and other liabilities does not have to be borne by the company that is planning to move on to the site. Responsibility for this lies with the former mine operators under their legal obligations – in Germany suitable provisions had to be set aside for this and various conditions had to be met up to and including the ultimate site closure plan – while the public authorities may also assume liability insofar as previous or future public infrastructure is involved. When it comes to the development of a post-mining site leading to the repurposing of its resources the regional policy planning issues that tend to arise in real life always contain an element of political leverage and lobbying, in other words the “self-interest” factor referred-to by Arndt. Indeed very little can be achieved in this area without a dedicated development team and sufficient political support to counter opposition from pressure groups and other interests. In certain circumstances this will call for dialogue, participation and compromise and usually a fair amount of staying power. This insight also tends to highlight the importance of the respective regulatory and political framework and the way in which this can facilitate economic developments. These parameters are always particularly important for a location-bound post-mining environment since companies that are planning to establish themselves in a new area are completely free, when it comes to choosing a competitive location and finding the necessary investment, to seek out better conditions.
All this leads us back to the aforementioned economic incentives for investment that Arndt referred to. These may take the form of favourable price and cost conditions for the land and site buildings and the availability of local grants, but can also include business related on-site offers for special consultancy and skills development services and proximity and/or close contact to educational and research establishments that are of relevance to post-mining development projects. As has been established in another study of employment inducements in former coalfield areas these “incentives … should not be widely spread but rather should be targeted at certain problem areas in as specific a way as possible and should only be deployed when the funding and provision of basic infrastructure services have been secured” (28).
The Zollverein World Heritage Site – a “real-world laboratory” for change and post-mining evolution
For an impressive and convincing example of how post-mining society has become a model for economic evolution we need look no further than the regeneration of the former German coalfields, and in particular the transformation of Zollverein as a World Heritage Site. The latter now serves as a prime example of successful structural change at a former mine site and its ongoing development. Here too we could echo Arndt and refer to a high location quality.
One of the visual symbols of this is the twin-frame headgear of the old Zollverein colliery (Figure 6). Now labelled “the Eiffel Tower of the Ruhr area” the former winding tower is one of the most prominent landmarks of the entire region. Incidentally, this former Essen colliery site and attached coking plant took its name from the Customs Union (Zollverein) of 1834 that established a customs territory from the various states that made up the German Confederation prior to the founding of the German Reich. The Zollverein was in effect an internal economic market – something that was a decidedly positive economic development for Helmut Arndt, and so the name would have been tailor-made for him.
The Zollverein Mine Company was founded in 1851 by the Ruhr industrialist Franz Haniel who developed its conveniently located coking coal deposits for his iron and steel works and in so doing created Zollverein colliery, the largest hard coal mine in all Germany. The architecture of the entrance area leading to the present-day park and the design of the founding shaft no. XII and its adjoining shafts 1, 2 and 8 all date from the 1920s and were the work of the renowned architects Schupp and Kemmer. Their decision to adopt the designs of the “New Objectivity” school was to establish Zollverein’s reputation as “the most beautiful mine in the world”. The coking facility was built in the 1950s and the coking plant that went into operation there in 1961 was at the time the largest in Europe. After an eventful history and several changes of ownership Zollverein was taken over by the newly formed Ruhrkohle company in 1968. As part of the restructuring process subsequently adopted by the German hard coal industry Zollverein was then decommissioned in 1986, the last active hard coal mine in the Essen area that alone had once been home to 190 or more collieries. Economic reasons then also forced the closure of the Zollverein coking plant in 1993. (29)
Following the mine’s closure the colliery site, and later the coking facility too, was taken over by the state of North Rhine-Westphalia and placed under a conservation order. After some extensive renovation and restoration work the site was essentially left unused. The Zollverein Development Company was then set up in 1998 and converted to the Zollverein Foundation (Stiftung Zollverein) ten years later in order to develop a master plan of how the site and its installations could be transformed into a living cultural and industry centre – a striking example of development competition in action at a post-mining location. In 2001 the Zollverein Colliery Industrial Complex was awarded the status of UNESCO World Heritage Site, an event that was to provide a major boost to local development.
Initially, the Zollverein World Heritage Site, which covers some 100 ha, served as a prominent industrial and architectural landmark with a monument trail that acted as an anchor point for the European Route of Industrial Culture. It was also surrounded by the Zollverein Park where flora and fauna – some entirely new to the area – could flourish and thrive amidst a number of art objects: a true industrial habitat. The adjoining buildings were gradually transformed and extended to create a cultural centre. This comprises the Red Dot Design museum, the architecturally innovative and award-winning SANAA building (now an “event location”), the PACT Zollverein choreographic centre for NRW, the Grand Hall events centre (the converted former compressor building) and various other buildings and installations that have been converted for special events and exhibitions, this including the coking facility, which is now an ice rink in the winter months, the relocated ceramic workshops, now in the Margaretenhöhe district, and the Ruhr Museum, now located in the former coal cleaning plant and upgraded as the Ruhr Regional Museum. In 2017 the Zollverein park became home to the new Northern Quarter of the Folkwang University of Arts and its 500 students taking design studies. Against this backdrop Zollverein has also become a popular setting for film and TV productions as well as for major regional events, including hosting the main celebrations for Essen/Ruhr as the European Capital of Culture for 2010 and the Ruhrtriennale annual music and arts festival. The Zollverein World Heritage Site is also a major tourist attraction and with around 1.5 M visitors a year was the most visited destination in the Ruhr metropolitan area (2011 to 2017) and second only to Cologne Cathedral as the second most popular tourist destination in all North Rhine-Westphalia. These developments follow a pattern for using post-mining locations that is now being seen all over the world. The CSRM study of this phenomenon that was published in 2020 found that when carried out in a methodical manner, which is still very much the exception, repurposing projects of this kind were being devoted to cultural and near-natural redevelopment in more than 60 % of cases (30).
A number of major private-sector initiatives have now also come into play and these have resulted in locational decisions for Zollverein. One of these, which was to be both symbolic and groundbreaking in its own right, was taken by the former mining company itself when RAG Montan Immobilien GmbH moved its head offices to Zollverein in 2012. The German Hard Coal Association (now the Association for Hard Coal and Post-Mining – bsn e. V.) then followed suit in 2017, along with the entire headquarters of the RAG company, which has taken over operational responsibility for all Ruhrkohle post-mining activities. It was accompanied by the RAG-Stiftung (RAG Foundation), which uses the capital investment from the former “white part” of RAG to finance the coal industry’s perpetual obligations in respect of disused collieries and also promotes educational, scientific and cultural activities in the old coalfield regions. The only technical process and real post-mining assignment still ongoing at Zollverein involves the site’s operation as an underground water pumping station. Following the closure of the German hard coal industry the operators RAG became fully focused on post-mining activities such as mine-water pumping, polder management and groundwater purification, contaminated land remediation and the processing of subsidence claims, along with the development of mining sites, property and real estate (Figure 7).
Over a period of more than 50 years of almost continuous restructuring, a process that was handled in a socially acceptable way throughout, the company has seen its workforce reduced from nearly 180,000 (with around 260,000 employed in the German coal industry overall) to the current figure of fewer than 800.
Meanwhile the evolution has continued at pace with many new companies moving their operations and head offices to the Zollverein park. As well the commercial activities attached to the new cultural centres, these focusing on areas such as gastronomy, cultural merchandising and the events and leisure business, various small traders have also set up shop here (firms making and selling design goods, jewellery, furniture and even soap and a private dance studio) and the park is now also home to a TÜV training centre, a nursing service and a hotel. The Prognos study that was commissioned by the Stiftung Zollverein (Zollverein Foundation) in 2017 showed that at least one thousand new employment opportunities were directly created in 2016 over the entire World Heritage Site. Add to this the indirect and (consumer) induced impact of the park and it has been estimated that the commercial development of the Zollverein site has already generated around 1,300 jobs. Prognos also found that a further 760 or so jobs have been created within the city of Essen as a result of tourist demand from visitors to the park. And nearly 700 temporary jobs have in addition become available through public and private investment in construction projects, site maintenance and terrain preparation. The Prognos study also indicated that between 1990 and 2016 a total of 334 M € of public investment was granted for the development of the Zollverein site, with a further 108 M € in investment being proposed for the period 2017 to 2025. This capital investment not only has a positive impact on jobs and value creation in the surrounding districts, which still suffer from economic underdevelopment, and in the city of Essen in general, and on the local and regional economy, which is predominantly composed of medium-sized companies, but will also bring in additional tax revenue for the public authorities by way of VAT, business tax, income tax, corporation tax and so forth. (31)
RAG and the RAG Foundation alone have added more than 200 direct employment opportunities to the Zollverein site, along with a considerable economic potential. Accenture management consultants now have a head office at Zollverein, while the Ruhr Conference – which was launched in 2018 by the state government of North Rhine-Westphalia and has now become a long-term regional development initiative – has also set up its central offices on the park, as has the Start-up Hub Ruhr. Together with the Digitalcampus Zollverein, which came on site in 2021 as an initiator and network platform for companies, start-ups and other players with a view to promoting digital co-working in the Ruhr metropolitan area, more than 150 individual firms and organisations have now developed new business activities at Zollverein and in the immediate vicinity. (32)
In this respect Zollverein has already become a genuine success story for economic evolution. Of course this does not mean that every post-mining location around the world can develop along similar lines, or anything like it. This will always depend on the specific location and other framework conditions. Evolution always means the partial, or in some cases the total, decline of old structures, though the actual “location” as a geographical space does not of course disappear. However it can be marginalised or go into a downward spiral in socio-economic terms. The Zollverein site is a perfect example of how, even after the old business model (mining) has ceased to exist, innovation and adaptation can create market-type developments, get these going and successfully transform them into new growth. This model example also shows that development investment needs time to mature, but it can then go on to trigger a development multiplier. And the Zollverein Foundation is doing no more than referring to itself when it talks of a “future workshop” (Figure 8) (33).
References / Quellenverzeichnis
References / Quellenverzeichnis
(1) So hat der neue grüne Bundesminister für Wirtschaft und Klimaschutz Robert Habeck am 24.3.2022 vor dem Deutschen Bundestag in seiner Rede zur Zeitenwende in der deutschen Energiepolitik nach dem militärischen Angriff Russlands auf die Ukraine angekündigt, dass die deutsche Energieversorgung auf eine breitere Basis (als bisher vorgesehen) gestellt und insbesondere die hohe Abhängigkeit von fossilen Energieimporten so schnell wie möglich reduziert werden müsste. Dabei könnte auch die heimische Braunkohle zumindest vorübergehend eine gewisse Rolle spielen. Siehe https://www.bundesregierung.de/breg-de/aktuelles/energiepolitik-zeitenwende-2020106
(2) Ausgangslage, Ziele, Inhalte, Werkzeuge und auch die Probleme dieser Coal Regions in Transition Initiative (inzwischen umfirmiert und erweitert zur EU Just Transition Initiative) werden erläutert in: van de Loo, K.: Werkzeuge für den Wandel – wie die EU die „Coal Transition“ bewerkstelligen will, in: Mining Report Glückauf 157 (2021) Nr. 6, S. 528 – 550.
(3) Zu dieser internationalen Allianz und ihrem Selbstverständnis siehe: https://www.poweringpastcoal.org/news/press-release/new-ppca-members-tip-the-scales-towards-consigning-coal-to-history-at-cop26
(4) World Bank Group; Stanley, M. S. et al.: Managing Coal Mine Closures: Achieving a Just Transition for All, Washington/D.C. 2018, download: https://www.worldbank.org/en/topic/extractiveindustries/publication/managing-coal-mine-closure
(5) Siehe dazu auch die Erörterung des Weltbankreports in van de Loo, K.: Das „Social Engineering“ der Stilllegungen von Kohlebergwerken – Weltbankreport, internationale Forschungslücken und Reflexionen aus deutscher Sicht. In: Mining Report Glückauf 155 (2019) Nr. 4, S. 394 – 412, hier insb. S.395f.
(6) Siehe die Broschüre des Forschungszentrums Nachbergbau: Damit Bergbauregionen Zukunft haben, Bochum 2020, S. 5.
(7) van de Loo, K.: Nachbergbau – ein neues Forschungsprogramm auch für die Wirtschaftswissenschaft. In: Mining Report Glückauf 154 (2018) Nr. 3, S. 245 – 260.
(8) Siehe dazu insb. Kretschmann, J.: Post-Mining – a Holistic Approach. In: Mining, Metallurgy and Exploration, published online 23 July 2020 (https://doi.org/10.1007/s42461-020-00265-y).
(9) Vgl. van de Loo, K.: Nachbergbau – ein Forschungsprogramm auch für die Wirtschaftswissenschaft, a.a.O., S. 246f.
(10) Arndt, H.: Lehrbuch der Wirtschaftsentwicklung. Die Evolutorische Wirtschafstheorie in ihrer Bedeutung für die Wirtschafts- und Finanzpolitik, 3., erg. Aufl., Berlin 2021, S. 19.
(11) Ebenda S. 20.
(12) Ebenda S. 24ff., S. 127.
(13) Akerlof, G. A.: The Market for Lemons: Quality Uncertainty and the Market Mechanism. In: Quarterly Journal of Economics, Bd. 84 (1970) Nr. 3, S. 488 – 500.
(14) Ebenda S. 29f.
(15) Siehe dazu beispielswiese Herdzina, K.; Seiter, S.: Einführung in die Mikroökonomik, 12. Aufl., München 2015, insb. S. 219ff., S. 242ff.
(16) Vgl. Mankiw, N. G.; Taylor, M. P.: Grundzüge der Volkswirtschaftslehre, 8. Aufl., Stuttgart 2020, insb. S. 999ff., S. 680ff., S. 720ff.
(17) Siehe dazu Göbel, E.: Neue Institutionenökonomik. Grundlagen, Ansätze und Kritik, München 2021.
(18) Ein maßgeblicher Vertreter in der deutschen Fachliteratur hierzu ist (und war es schon vor geraumer Zeit) Hermann-Pillath, C.: Grundriss der Evolutionsökonomik, München 2002.
(19) Ebenda S. 22f.
(20) van de Loo, K.: Marktstruktur und Wettbewerbsbeschränkung, Eine kritische Analyse der konzeptionellen und theoretischen Grundlagen strukturorientierter Wettbewerbspolitik, Frankfurt a. M. u. a. 1992.
(21) Arndt, H.: Markt und Macht, 2. Aufl., Tübingen 1973.
(22) Arndt, H.: Lehrbuch der Wirtschaftsentwicklung. Die Evolutorische Wirtschafstheorie in ihrer Bedeutung für die Wirtschafts- und Finanzpolitik, a.a.O., hier: Prof. Heinz. J. Bontrup S. I – XLVI.
(23) Arndt, H.: Lehrbuch der Wirtschaftsentwicklung. Die Evolutorische Wirtschafstheorie in ihrer Bedeutung für die Wirtschafts- und Finanzpolitik, a.a.O., S. 5.
(24) Ebenda S. 5f., speziell zu Jevons S. 170ff.
(26) Ebenda insb. S. 245ff. zur Wirtschafts- und Finanzpolitik; auch alle nachfolgenden Abschnitte über Arndt und zu seinen Aussagen und Zitaten beziehen sich als Quelle auf eben dieses Lehrbuch von Arndt zur Wirtschaftsentwicklung.
(27) Im Lehrbuch der Wirtschaftsentwicklung erwähnt er einmal am Rande die Kohlevorräte des Ruhrgebiets als früheren Standortvorteil (ebenda S. 226), der allerdings durch die energiewirtschaftliche Entwicklung, sprich: billige Energieimporte, hinfällig geworden wäre.
(28) Siehe dazu vertiefend van de Loo, K.; Tiganj, J.: Beschäftigungsimpulse für (Kohle-) Nachbergbauregionen. In: Mining Report Glückauf 157 (2021) Nr.1, S. 22 – 40, insb. S. 32ff.
(29) Zur Historie und Entwicklung der Zeche und Kokerei Zollverein siehe Stiftung Zollverein (Hrsg.): ZOLLVEREIN – Welterbe und Zukunftswerkstatt, Berlin 2018; ferner ältere Beiträge, wie z. B. Geschichtswerkstatt Zollverein (Hrsg.): Zeche Zollverein. Einblicke in die Geschichte eines großen Bergwerks, Essen 1996; Grabe, V. (Hrsg.): Welterbe Zollverein. Geschichte und Gegenwart der Zeche und Zollverein, Essen 2008; Buschmann, W.: Zeche und Kokerei Zollverein in Essen, 2. Aufl., Köln 2010.
(30) Siehe dazu auch van de Loo, K.: Anhaltende Nachbergbaudefizite der Rohstoffpolitik und Neunutzung von Bergwerken. In: Mining Report Glückauf 157 (2021) Nr. 4, S. 318 – 333, speziell zur CSRM-Studie S. 326f.
(31) Basis-Informationen Zollverein. Stand Mai 2018, abrufbar unter www.zollverein.de
(32) Siehe Porträt „Digital Campus Zollverein“ auf https://campus-zollverein.de
(33) So schon der Titel der Publikation der Stiftung Zollverein (Hrsg.): ZOLLVEREIN – Welterbe und Zukunftswerkstatt, Berlin 2018.