The Institute for Integrated Economics is a non-profit research organization focused on developing an unbiased view of global economic processes.

Ultimately, we try to re-focus economic research away from individual subsystems, towards a broader understanding of the larger forces driving overall progress or retreat. The global economic crisis that began in 2008 is a good example of why this is necessary - traditional economic science neither provided the ability to predict the current downturn, nor does it sufficiently explain the mechanisms at work.

On June 15, 2010, when U.S. President Obama responded to the dramatic oil spill in the Gulf of Mexico during his Oval Office speech, he not only included the list of things the government wants to do about the imminent problem, but also urged the country to "transition away from fossil fuels" and to "jump start the clean energy industry". His pledge is in line with many of his predecessors, and with other leaders around the world, who for years now have supported renewable energy technologies. This is particularly true in Europe, where installed capacity for renewables has grown significantly during the past ten years. And even the U.S. - while slow in introducing renewable electricity technologies - to date has produced a significant amount of alternative fuels primarily through the mandatory addition of ethanol to gasoline.

For many people hoping for a future with less greenhouse gases and less environmental damage this focus on renewable energies might sound like a step in the right direction; for those who want low cost energy, maybe less so. But what both sides of the discussion forget is something quite simple: an energy future without fossil fuels will eventually arrive, and there is no way to extend current energy usage patterns and delivery systems into the future. In a nutshell: our current plans will fail. Let's explore why that is.

A vivid debate is currently going between two groups of economists, politicians and financial analysts. One camp argues that government deficits have to be kept within reasonable limits or avoided altogether, because fast-increasing public debt will become unmanageable in the foreseeable future. We wholeheartedly agree.

The other group advocates a continuation of stimulus spending and credit driven investment by governments. In a New York Times op-ed piece published on June 17, 2010, Paul Krugman explained why slamming the breaks on government spending would throw us back into recession. On June 28, he doubled up, now arguing that with reduced government stimulus, we're headed straight for a new Depression. We fully agree with his assessment.

How come IIER is simultaneously able to agree with two camps which are ready to turn to fists when making their argument? It's quite simple: both have a point. But equally, both have no real answer.

One of the most surprising things we encounter these days is that no country, no established economic research institute, and no international organization (such as the IMF) publicly discusses scenarios that don't plan for a return to stable economic (GDP) growth. Even Greece's government, after 2012, expects growth, which would allow the country to slowly reduce its staggering debt. Equally, the U.S. government forecasts annual average (real) growth rates of 4.4% for the years 2012-2014, and 2.4% thereafter until 2020. And so it continues, no matter where we look.

What we find most intriguing, but equally most worrying, is that in all the economic projections we have seen lately, decline or zero growth aren't even mentioned as a faint possibility. We can only speculate why that is the case, but we see significant evidence that only limited effort - if any - is put into understanding the possible consequences and required mitigation strategies. We are highly alarmed about the fact that so few people seem to be ready to think the not-so-unthinkable.

When discussing possible limits to human ecosystems, IIER is regularly meeting with individuals and organizations promoting actively planned and managed de-growth as a possible solution. This approach comes in various flavors. Some suggest an active reduction of rich countries' energy use and consumption, while others point out that there are too many people on our planet, and that we have to reduce or reverse population growth in order to prevent a collapse in the near future. Yet irrespective of individual focus, organizations promoting de-growth either suggest a path of voluntary reductions of consumption by individuals or wish for governments to act by mandating behavioral change or by establishing incentives to drive their de-growth objective.

IIER research suggests that all those de-growth approaches will not be successful at an aggregate societal level, at least not before reality enforces de-growth when economic expansion is no longer possible. Although small groups of people actually might sign up, societies as a whole likely won't. We see three key reasons for our skepticism: evolution, substitution effects and financial markets locked into a growth model.

Nobel Prize winning economist Paul Krugman has - and correctly so - stated that economics has failed to predict the economic crisis of 2008/09 that led to a reduction in GDP all around the world, with very few exceptions. He says that "few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy." We definitely agree with this assessment.

Among the many useful man-made „artifacts“, money is probably the most versatile. It is not only a means of exchange for trading goods and services; it also provides an easy and simple store for previously generated wealth.

The importance of money has grown over the course of thousands of years, yet only during the past few centuries has it made inroads into most people’s lives. Along with this rise of money’s role, debt has become a close companion. Originally mostly used to finance government and trade, it is now present everywhere. One way to see credit is that it serves as a way to make the benefits of an individual's or a company's future surpluses available today, by enabling investments or consumption before having saved enough to make a purchase happen. This obviously comes at the price of interest.

The debate about future energy alternatives can be an emotional and heated one. Many people believe that renewables, such as wind and solar power, are the answer; others dismiss those technologies outright. The same is true for energy applications, including passenger cars, where various alternative concepts are under evaluation or beginning production – including more efficient internal combustion engines, electric vehicles, and hydrogen powered cars.

Often, proponents lose their objectivity when defending a particular approach. At IIER, we see it as our responsibility to provide an unbiased perspective on alternative technologies, aimed at helping individuals, companies and governments make their decisions.

Mostly, today's macroeconomic theory defines economic output as the result of a deliberately chosen combination of human labor and capital input (buying materials, infrastructure, services, etc). Over time output from a given quantity of inputs improves due to efficiency and/or productivity gains. These gains are typically included as an additional factor in production functions. Over the past two centuries, both labor and capital productivity have been growing more or less continuously, indicating an ever-improving economy.