The Fallacy of Endless Economic Growth

Click here to view the original article.

[What economists around the world get wrong about the future. "The idea that economic growth can continue forever on a finite planet is the unifying faith of industrial civilization." *RON*]

Christopher Ketcham, Pacific Standard Magazine, 16 May 2017

Nubes, 2011. (Photo: Alejandro Durán)
The idea that economic growth can continue forever on a finite planet is the unifying faith of industrial civilization. That it is nonsensical in the extreme, a deluded fantasy, doesn't appear to bother us. We hear the holy truth in the decrees of elected officials, in the laments of economists about flagging GDP, in the authoritative pages of opinion, in the whirligig of advertising, at the World Bank and on Wall Street, in the prospectuses of globe-spanning corporations and in the halls of the smallest small-town chambers of commerce. Growth is sacrosanct. Growth will bring jobs and income, which allow us entry into the state of grace known as affluence, which permits us to consume more, providing more jobs for more people producing more goods and services so that the all-mighty economy can continue to grow. "Growth is our idol, our golden calf," Herman Daly, an economist known for his anti-growth heresies, told me recently.

In the United States, the religion is expressed most avidly in the cult of the American Dream. The gatekeepers of the faith happen to not only be American: The Dream is now, and has long been, a pandemic disorder. Growth is a moral imperative in the developing world, we are told, because it will free the global poor from deprivation and disease. It will enrich and educate the women of the world, reducing birth rates. It will provide us the means to pay for environmental remediation—to clean up what so-called economic progress has despoiled. It will lift all boats, making us all rich, healthy, happy. East and West, Asia and Europe, communist and capitalist, big business and big labor, Nazi and neoliberal, the governments of just about every modern nation on Earth: All have espoused the mad growthist creed.

In 1970, a team of researchers at the Massachusetts Institute of Technology began working on what would become the most important document of the 20th century to question this orthodoxy. The scientists spent two years holed up in the company of a gigantic mainframe computer, plugging data into a system dynamics model called World3, in the first large-scale effort to grasp the implications of growthism for mankind. They emerged with a book called The Limits to Growth, issued as a slim paperback by a little-known publisher in March of 1972. It exploded onto the scene, becoming the best-selling environmental title in history. In the Netherlands half a million copies sold within the year. More than three million copies have been sold to date in at least 30 languages.

Its message was commonsensical: If humans propagate, spread, build, consume, and pollute beyond the limits of our tiny spinning orb, we will have problems. This was not what Americans indoctrinated in growthism had been accustomed to hearing—and never had they heard it from Ph.D.'s marshaling data at one of the world's citadels of learning.

(Photo: Alejandro Durán)
The idea for the Limits study originated with a charismatic Italian industrialist named Aurelio Peccei, who sidelined as a philosopher and author on world affairs. Peccei had fought for the resistance in Italy—he had been captured and tortured by the fascists—and had gone on to a spectacular career working in industry, notably as an executive at Fiat. By 1968, he had begun to question the legacy that industrial civilization was leaving its children. He published a book on the subject, The Chasm Ahead, in which he worried about the "suicidal ignorance of the human condition" on a planet of dwindling resources, rampant population growth and material consumption, mounting pollution and waste. Seeking to understand the global system, its trajectory, and its prospects for survival, Peccei co-founded the Club of Rome, a think tank whose purpose was to lay bare the "predicament of mankind." The club would sponsor the study, and Peccei reached out to MIT, where a 29-year-old professor of system dynamics named Dennis Meadows, who had helped design the World3 computer program, offered to direct it.

Meadows and his team used World3 to examine growth trends worldwide that had prevailed from 1900 to 1970, extrapolating from the data to model 12 future scenarios of global development and its consequences, projected out to the year 2100. They focused on the complex feedback loops—the system dynamics—that play out when we tax the limits of the planet. The team separated those limits into two categories: sources and sinks. Sources are those things we need from nature for industrial civilization to survive: minerals, metals, rare earth elements, fossil fuels, fresh water, arable soil. Sinks refer to the capacity of the planet to absorb pollution of its soil, air, and water, and, most ominously, the capacity of its atmosphere to absorb carbon.

A typical if simplified system dynamic in the study went like this: "Population cannot grow without food, food production is increased by growth of capital, more capital requires more resources, discarded resources become pollution, pollution interferes with the growth of population and food." The models showed that any system based on exponential economic and population growth crashed eventually. One of the gloomier models was called the standard run, in which the "present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged." In that scenario, which came to be known as business-as-usual, "the limits to growth on this planet will be reached sometime within the next one hundred years," the team stated. Things end unhappily: "The most probable result ... will be a rather sudden and uncontrollable decline in both population and industrial capacity."

Sudden and uncontrollable: in other words, a collapse of civilization, a collapse that would mean the loss of human life, culture, and capital on a scale unimaginable. The World3 business-as-usual model did not give an exact date for the collapse, but suggested it would likely begin around the middle of the 21st century.
Limits was immediately the subject of vicious attack by the defenders of growthism. The first salvo arrived in the New York Times in April of 1972, a month after publication, from the pens of three economics professors at Columbia University and Harvard University, two of whom happened to be publishing a book that year about "affluence and its enemies." Limits was "an empty and misleading work," they wrote. It was "less than pseudoscience and little more than polemical fiction." It had the "scent of technical chicanery." The insinuation was that Meadows' team had fed bad data into their supercomputer, the result being, as the Times reviewers stated, "garbage in, garbage out."

The rebukes piled up over the years: in The Economist, Forbes, Foreign Affairs, in the halls of academia, at Yale, Princeton, Harvard, and even at MIT. With an evangelical fervor, article after article assured the public that the book so badly miscalculated our future it should be dismissed outright. The most commonly cited error ascribed to Limits centered on a table of data that suggested the world would run out of gold by 1981, petroleum by 1992, copper, lead, and natural gas by 1993. Other vital minerals—silver, tin, zinc, mercury—would be gone by 2000. But the book's authors made no such predictions. The data was used only to illustrate how exponential growth quickly depletes non-renewable natural resources. Nevertheless, Limits' detractors to this day continue to cite this allegedly erroneous data set to support the claim that the modeling was all wrong.

Worse than any specific prediction, however, was that the Limits team seemed to be questioning the viability of the American Dream. "Limits preaches that we must learn to make do with what we already have," grumbled the economists writing in the Times. The study was an affront to the cornucopian credo of mainstream economics, which says that pricing and innovation will always save us from the depletion of sources and the saturation of sinks. If a resource becomes scarce in the marketplace, economists tell us, its price rises, which acts as the signal for society to innovate alternatives because there's money to be made doing so. If a sink is saturated, technology—priced right—will ameliorate the effect, scrub the smokestacks, disperse the oil spills, and so on.

This unquestioning faith in the magical powers of human ingenuity has led economists to make some preposterous assertions. Oxford University professor Wilfred Beckerman, who dubbed Limits "a brazen, impudent piece of nonsense," claimed there is "no reason to suppose that economic growth cannot continue for another 2,500 years." Carl Kaysen, a doyen of economics at Harvard, said that, by some calculations, the Earth's "available matter and energy" could support a population of around 3.5 trillion people, all living at American standards of affluence. Julian Simon, who publicly expressed his loathing for Limits, assured us back in 1992 that "We now have in our hands—in our libraries, really—the technology to feed, clothe, and supply energy to an ever-growing population for the next 7 billion years." Elsewhere, he made the bizarre declaration that, "in the end, copper and oil come out of our minds."

The Limits authors were facing off against a fundamentalist ideology here, one that happened to have the winds of history at its back. In the two centuries of Western techno-industrial civilization that preceded the book, the ceilings to population and economic growth had been shattered again and again by free-market-driven innovation. The doomsayers had consistently been proved wrong. The 18-century political economist Thomas Malthus famously predicted that exponential growth of population would eventually outstrip the capacity of land to produce food, and the result would be mass starvation. But the world innovated its way around hunger with the Green Revolution and genetically modified organisms and the deep-drilling of previously untappable aquifers. So it was that Limits was relegated to the blinkered realm of Malthusian doomsdayism.

By the 1980s, President Ronald Reagan was citing the book in his speeches only to ridicule it. "Perhaps you remember a report published a few years back called The Limits to Growth," he said at the University of South Carolina in 1983. There are "no such things as limits to growth," he declared to the students in the audience. Even the title itself, Reagan said, was offensive, because "in this vast and wonderful world that God has given us, it's not what's inside the Earth that counts, but what's inside your minds and hearts, because that's the stuff that dreams are made of, and America's future is in your dreams."

Algas, 2013. (Photo: Alejandro Durán)
The effect of this critical backlash was that Limits mostly disappeared from mainstream discussion. It was commonly understood, Meadows said, that it would be very inconvenient to the high priests of the growthist orthodoxy if the public began to take the study seriously. Meadows, who is retired from academia but still travels the world to lecture, met readers in the 1970s and '80s who said the book had changed their lives. "In the 1990s and 2000s, they said, 'Your book changed my parents' lives.' Now," he said, "I give a speech and people ask, 'Did you write a book?'"
Over the last decade, Limits has attracted renewed interest from ecologists and economists, with many having developed their own methodologies to gauge its accuracy. In 2014, Graham Turner, of the Melbourne Sustainable Society Institute in Australia, compared the book's standard run projections with historical data since 1970. He looked at, among other statistics, birth and death rates as an approximation of population trends, industrial output per capita as a measure of development, and carbon in the atmosphere as a measure of pollution. We are hewing pretty closely to business-as-usual, he concluded, noting that "the alignment of data trends with the LTG dynamics indicates that the early stages of collapse could occur within a decade, or might even be underway."

In March of 2016, the All-Party Parliamentary Group on Limits to Growth in the United Kingdom issued a report declaring that the 1972 projections were worrisomely spot-on. The author of the report, Tim Jackson, a professor of sustainable development at the University of Surrey, told me, "Numerous analyses have shown that the historical data track very closely the lines of the Limits to Growth standard run." Ecologists Charles Hall and John W. Day conducted their own comparison of Limits' projections with real-world data in 2009, and found the projections to be "quite on target. We are not aware of any model made by economists that is as accurate over such a long time span." Matthew Simmons, the noted investment banker whose company managed tens of billions of dollars in energy-industry mergers and acquisitions, offered a similar observation in 2000. "The most amazing aspect of the book," he wrote, "is how accurate many of the basic trend extrapolation[s] ... still are 30 years later."

On the book's 20th anniversary, in 1992, Meadows gathered up his original team to co-author an update called Beyond the Limits, and, in 2004, he completed a 30-year update. He hoped, in part, to address the most widespread critique of the 1972 study: that it had underestimated innovation and technology, the twin engines of industrial civilization and the pillars of the growthist faith. The first edition of Limits had, in fact, gone a long way toward accommodating technology as a possible saving grace for the growth system. In one of the 12 scenarios, the authors modeled a world system "producing nuclear power, recycling resources, and mining the most remote reserves; withholding as many pollutants as possible; pushing yields from the land to undreamed-of heights; and producing only children who are actively wanted by their parents." Nevertheless, the authors wrote, "the result is still an end to growth before the year 2100. The application of technological solutions alone has prolonged the period of population and industrial growth, but it has not removed the ultimate limits to that growth."

The version of World3 that Meadows used for the second and third editions of the book incorporated the possibility of far greater technological advances. "But the results and our conclusions remained the same," he told me. "In those later runs we even assumed infinite resources. But guess what? It is still impossible for the human population and consumption to grow exponentially forever."

Now, at the very moment that we need innovation to accelerate—to mount a viable response to climate change, to locate new resources and replace dwindling or despoiled ones—evidence suggests that the opposite is happening. Joseph Tainter, a professor of sustainability at Utah State University, examined innovation trends using 30 years of data from the U.S. Patent and Trademark Office. What he found was troubling. Slightly more than half of all patents issued in this country are to foreign entities, so Tainter considered changes to the number of patents per applicant to be an accurate indicator of global productivity as expressed through invention. In the major technical fields he studied—drugs and chemicals, metallurgy, energy, biotechnology, information technology, and so on—he found that the number of researchers on each patent steadily increased between 1974 and 2005. This means more time and man-hours—and presumably more money invested—for a declining return. In his 1988 book The Collapse of Complex Societies—a kind of companion volume to Limits—Tainter makes the case that as civilizations grow they produce increasingly complex problems that demand increasingly complex solutions. Complexity demands more energy, requiring new technologies for energy extraction. But, as Tainter's study suggests, innovation may have its own limits.

The concept of energy-return-on-investment, known as EROI, was originally coined in reference to fossil-fuel exploration, and is commonly used to compare the amount of energy required to extract, transport, and refine a particular resource with the amount of energy it ultimately provides. EROI for our master energy source happens to be plummeting, as discovery and extraction of fossil fuels becomes more difficult and costly. (The rising cost—which is to say complexity—of resource extraction and retrieval was one of Limits' broad projections that also turned out to be accurate.) EROI for global oil and gas production went from 30-to-1 in 1995 to 18-to-1 in 2006. In the U.S., the EROI for oil discovery in 1919 was an astonishing 1,000-to-1. By the 2010s, it was 5-to-1.

In mining, multifactor productivity—which reflects the efficiency with which the inputs of capital, labor, materials, services, and energy generate a unit of mineral product—has been on a downward slope since 2002. According to the Australian Bureau of Statistics, it now takes 40 percent more inputs to dig up minerals in general, while the grain sizes and ore grades of what's being retrieved are declining. The Journal of Environmental Science and Engineering reported in 2013 that, "under the present paradigm of use," the world, within decades, will begin seeing "scarcity" of "most of the strategically important metals and materials that are fundamental to [the] running of our societies." According to the study's lead authors, a chemical engineering professor at Lund University in Sweden and an applied systems analyst at Stockholm University, "scarcity may lead [to] 'peak civilization,' unless urgent countermeasures are systematically undertaken."

Amanecer, 2011. (Photo: Alejandro Durán)
Even in the midst of substantial innovation, today's global economy has become more profligate and more wasteful, using more materials per unit of GDP than it did 20 years ago. According to a 2016 report from the International Resource Panel at the United Nations Environment Programme, the amount of virgin natural resource needed for a given amount of product has gone up 17 percent over a single decade. In 2000, it took an average 1.2 kilograms of materials to generate one dollar of global GDP. By 2010, it took 1.4 kilograms. The amount of primary materials extracted from the Earth globally rose from 22 billion tonnes in 1970 to 70 billion tonnes in 2010, with per capita global material use going from seven tonnes in 1970 to 10 tonnes over the same 40-year period. According to the report, there is "growing environmental pressure per unit of economic activity," not less.

Optimists will undoubtedly look to renewable energy as a stay against declining EROI and rising seas. But they may be blindsided by the stark limits of wind, solar, and hydro. Researchers at Monash University, marshaling considerable data, concluded that the cheerful scenarios projecting renewables will supply most of the world's energy by mid-century "assume unrealistic technical potentials and implementation times." Which means we'll be stuck mostly with fossil fuels to keep the expansion machine running. Tim Jackson of the University of Surrey has calculated that, at current rates of carbon density—the amount of carbon released per unit of energy consumed—our greenhouse gas emissions will increase by more than 2 percent per year. At that rate, by 2050 carbon dioxide emissions would be more than double what they were in 2015. To achieve a tenfold reduction in global emissions by 2050, carbon density would have to decline on average 8.6 percent annually—almost 10 times the rate at which it has declined over the last 50 years and 50 times faster than in the past decade. In other words, we would have to innovate carbon-reduction strategies at rates never before seen, with technologies of immense effectiveness whose global-scale implementation would be entirely unprecedented.
And so, as we blunder along with business-as-usual, awaiting the techno-messiah promised by the cornucopians with their free markets and their profit-inspired geniuses, an alternate future awaits us. In 2014, Naomi Oreskes and Erik Conway, historians of science at Harvard and the California Institute of Technology, respectively, gave us a picture of what that future might look like. Together they published The Collapse of Western Civilization, a grim work of futurist science fiction. It was Limits transformed into a novella of climate-fueled apocalypse.

"Suffice it to say that total losses—social, cultural, economic, and demographic—were greater than any in recorded human history," declares the narrator, a historian who lives in a hobbled, depopulated society 300 years after the "ultimate blow for Western civilization." That blow comes in 2093, when breakneck atmospheric warming leads to the disintegration of the West Antarctica Ice Sheet. This results in a sea level rise of five meters or more that inundates coastal cities and, combined with the effects of other melting ice sheets, sends billions of people fleeing inland to higher ground.

The ice sheet meltdown is preceded by decades of social and economic unrest driven by climate change. In the year 2041, for example, a series of "unprecedented heat waves" scorches the global food supply. In North America, desertification that had started in the early 21 century consumes the world's most productive farmland in California and the Great Plains. As the unrest intensifies the U.S. declares martial law, so the good citizens won't riot, fighting each other for crumbs.

Governments worldwide are destabilized, overthrown. The warmer planet, a Petri dish for insects whose ranges have expanded, releases upon a starved, dehydrated, weakened humanity the usual diseases borne by flies and mosquitoes—dengue fever, yellow fever—and lack of sanitation in mass encampments leads to explosive outbreaks of those old nemeses, typhus and cholera, while there emerge, as the future chronicler writes, "viral and retroviral agents never before seen."

Bombillas, 2013. (Photo: Alejandro Durán)
What stuns the future chronicler in The Collapse of Western Civilization, looking back on this tragic period, is that the smartest scientists in the world, employing the most advanced analytical and technical methods available, had charted the trajectory toward climate doom long before it was a fait accompli. They had warned that, if civilization was to survive, it had to reduce its pressure on waste sinks. "Virtually all agree that the people of Western civilization knew what was happening to them but were unable to stop it," says the narrator. "Indeed, the most startling aspect of this story is just how much these people knew, and how unable they were to act upon what they knew."
Despite the somber context, Limits was not all gloom. Of the 12 scenarios it presented, four did not end in collapse. Economic and ecological stability was possible, the researchers found, but only if global society engaged in "a deliberate, controlled end to growth," reducing industrial output and per-capita consumption. Limits described this as a "stabilized" world scenario, "a long-term equilibrium state" in which "the basic material needs of each person on Earth are satisfied and each person has an equal opportunity to realize his individual human potential."

Enough stuff to go around, enough for everyone to share in a decent life, so long as we all agree not to want too much. Terrifying notions for those of us—by which I mean most of us—who are entrenched in the free-market capitalist mindset. No wonder it was the mainstream economists who mounted the strongest attacks on Limits, those whose paychecks depend on elite capitalist institutions, who construct for the public the ideology that rationalizes endless growth, who assure that we will never need to share our piece of the pie if we just keep on growing the pie.

The driving question behind the study was whether global society could organize itself to live within its means while providing a peaceful, equitable existence for its people. By asking that question and answering it, Limits was dangerous to a social order that posits selfishness, greed, and envy as the drivers of progress, that tells us to hoard for ourselves what we can get and ignore the pangs of conscience reminding us that the bigger pie hasn't led to a better life for all.

When the authors of Limits said in 1972 that "population and capital growth are actually increasing the gap between the rich and the poor," when they debunked the myth that more growth will lead to human equality, they were waving a knife at the neoliberal capitalist order. Because what else were they talking about in a world with no growth and equal opportunity than the redistribution of wealth? What else were they demanding but a radical change in our definition of liberty? "Equilibrium," they wrote, "would require trading certain human freedoms, such as producing unlimited numbers of children or consuming uncontrolled amounts of resources, for other freedoms, such as relief from pollution and crowding and the threat of collapse of the world system." They suggested it was a trade-off worth making. But the downsizing, the sharing, would have to be voluntary. We couldn't do it under conditions of coercion. It would have to be, in Dennis Meadows' words, an "orderly and cooperative descent toward a socially just sustainability for all."

The bottom line, though, is that if wealth were divided evenly among the nine billion people expected on this planet by 2050, the per capita material affluence of the global north would have to drop significantly. It's doubtful that an entire civilization indoctrinated in selfishness would bear this without an epic tantrum. It would be a process of social maturation on a scale never before seen. Because in order to retain our humanity in the face of limits, we would have to confront inequality head on.
I called up Meadows to ask him what he thought about Limits to Growth 44 years after its publication. He said that he was optimistic in 1972. There was time enough to divert the ship of too-muchness from its collision course with the iceberg. But last summer he sounded depressed and somewhat cynical. Business-as-usual, he said, risks a chaotic implosion imposed by nature, followed by geopolitical turmoil and resource wars. This now seemed to be our likely path, and it was time, he said, to prepare for "system shock."

Meadows sees a link between limits to growth and what he calls "the authoritarian tsunami that is sweeping across Western democracies." He believes that global society has already entered the phase where the capacity to grow, to generate real new wealth, is declining. When growth stops, tensions mount. "Adapting our institutions, population, aspirations, culture, norms, and capital to this new phase of zero and negative growth," Meadows told me, "will entail many decades of change that most people will experience as a deterioration of order"—and thus as a mandate for more-authoritarian government.

Aldous Huxley predicted this eventuality. "There are many roads to Brave New World," he wrote in 1958. "[B]ut perhaps the straightest and the broadest of them is the road we are traveling today, the road that leads through gigantic numbers and accelerating increases." A planet with a population and economy so large it produces a permanent civilizational emergency, a state of constant crisis, is one ripe for "permanent control of everybody and everything by the agencies of the central government." This would be the ultimate irony of the growthist faith, underpinned as it is by free-market fundamentalism: Only the tyrannical state, with its monopoly on violence, its enormous bureaucracies, its tentacles reaching into every facet of life, will have the power to save us from the stupidity that we called the freedom to grow forever.

Comments

Popular Posts

Kinder Morgan's $771,000 donation to B.C. Liberals raises red flags while Premier shifts to damage control

The Pharma Jerk We All Hated Last Month Still Hasn’t Dropped the Price of That Drug

Exxon, Shell and other carbon producers sued for sea level rises in California