Inifinite economic growth – an addiction that will kill us all
Look beyond all the theatre of the US debt crisis, and there is opportunity in disguise, says Pat Thomas (31/7/11)
As Congress continues squabbling like over-tired sugar-saturated kindergarteners, Americans are rightfully afraid that the party really is over, that the ‘American way of life’ is dying, and that this death brings with it a future where an easy sense of entitlement and rampant consumerism and economy based on endless growth is over and where we will all need to apply more appropriate limits. This feels like death, and yet it is a basic tenet of life that something has to die before something else can be born.
The US debt crisis could actually be an opportunity disguised as a crisis. But sadly, there seems to be little enthusiasm for such revolutionary thought, let alone action, to reshape the economy. Instead the likely outcome is an anti-climactic compromise aimed at maintaining America’s triple A credit rating whatever the costs; one that will be used to 'prove' that the system works, but which in reality is propping up something that is morally wrong, culturally devastating, spiritually toxic and, of course, environmentally disastrous.
‘More than at any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other to total extinction. Let us pray we have the wisdom to choose correctly.’
It could be a prayer to almost any of the difficult choices we humans are currently faced with, but seems particularly pertinent to a debate about economic growth. For many economists the choice is simple: we grow or we die. And at first glance it would seem ridiculous to suggest that in pursuing perpetual growth we are in fact hastening the death of our species. And yet that is exactly what we are doing.
The promotion of a growth economy is predicated on many alleged benefits: greater longevity, better health, greater prosperity and more leisure time. Few of these stand up to closer scrutiny. We would, for instance, be hard pressed to show that longevity is a direct result of economic growth; though economic growth has certainly benefited from a longer-living, and thus longer-spending, population.
We may not be hit by plagues anymore (though as climate change bites even that may not be true for much longer); but we are suffering from more chronic diseases – many of which are environmentally mediated – than ever before and our longer-lived population requires much more healthcare – once again, a real boon for the economy. As for greater prosperity, according to the UN, 80 per cent of the world’s wealth is concentrated in 20 per cent of the population, and survey after survey shows that in order to maintain our precious standard of living we are all working longer hours than ever before. So much for leisure time.
The big picture of the consequences of economic growth and its view of the natural capital of the planet as a collection of resources to be exploited for the benefit of Homo economicus is pretty distressing. To be environmentally literate is to be acutely aware of the all-pervading and often malign influence of the growth economy:
• Our fossil fuel and mineral resources are rapidly depleting
And then there is the sad fact that most humans in the developed world define themselves as consumers first, and people second.
Although it can be hard to accept the growth economy as anything but benign, the truth is that economic philosophy is dangerously out of sync with nature and with the human psyche and is doing untold damage to both. What is more, in a world where growth is the only goal, everything is open to exploitation.
The mantra of ‘growth’ has become a kind of mental monoculture. Many businesspeople and economists can’t see any other point of view and don’t really want to. And yet every argument that we make in favour of growth falls down at the feet of one simple fact: the resources upon which growth depend are running out. In fact the only thing we seem to have in abundance these days is people.,
Indeed, in my lifetime the population of the planet has doubled and the current economic paradigm relies on there being an increasing number of people in the world, to buy an increasing amount of stuff. The belief system of economics also says that we need perpetual growth to produce full employment for all these people and thereby avoid economic collapse.
It’s a vicious circle the consequences of which have been population explosion and an ever-increasing draw on natural capital. With regard to raw materials, nature is a closed system. So the natural capital on which our current economic system depends will always be limited.
There is only one Earth. At current rates of consumption, and with the population as it stands globally, there are about 1.9 hectares of productive area per person, but the average ecological footprint is already 2.3 hectares. So we currently require one and a half Earths to live sustainably. The largest footprint belongs to citizens of the United States, who use up 9.6 hectares each. Five Earths would be needed if everyone in the world today consumed at that level.
Currently people in China use somewhere around 1.4 hectares per person. However, if world population continues to grow unchecked, and if people in China and India start consuming at US levels, it is estimated that we would need 25 Earths to satiate everyone’s desires.
In essence, there are simply too many of us using too much, too fast. And yet economics continues to demand unlimited growth. The only logical conclusion of this is that an economic system based on growth in demand and consumption is one that is designed to fail and must eventually come to an end, either through human design – let’s be generous and call that ‘choice’ – or through natural disaster.
You won’t hear any politicians talking this way because the way we have allowed our economic system to become structured is such that any drop in demand triggers market panic and the political nightmare of mass unemployment. Instead we continue to prop up the existing system through drops in interest rates, massive increases in credit card debt and home loans, tax cuts, huge federal deficits, bond sales and public and private borrowing from other nations. In other words, we arrived at a place where we simply shuffle money (and debt) around in order to maintain the illusion of growth.
As radical economist Herman Daly is so fond of reminding us “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
And in the midst of all this craziness, this belief in a growth economy makes serious efforts in the direction of energy conservation, protection of natural resources and limits to population growth increasingly problematical. And the problem is not merely technological; it is cultural in the deepest sense.
Starting two centuries ago, our species embarked on this path of unprecedented growth, founded on a temporary subsidy of cheap hydrocarbon energy. Climate change is a side effect of fossil fuel consumption, and can now be seen as the most critical symptom of our growth binge. But unless we address the core of the problem, other symptoms will soon overwhelm us, even if we manage technically to resolve the dilemma of carbon emissions.
Addressing the core of the problem means letting go of growth; it means engaging in a period of controlled societal contraction, characterised by a stable or declining population consuming at a per capita level far below that currently taken for granted in the industrialized world.
And whilst some people propose sustainable growth this, of course, is something of an oxymoron. Even at a small rate of steady growth – say between 2 and 3 per cent a year – we will eventually see a doubling of the economy in around 25 years. The price of that growth is a doubling of our use of resources and a doubling of our waste and pollution. On this trajectory our economy could have quadrupled by 2050. Contrast this with the 2006 Stern Inquiry into the economics of climate change, which made it plain that by the middle of the century we must reduce CO2 emissions by up to 80 per cent, and even the comforting concept of sustainable growth becomes untenable.
However painful it is to imagine, and however difficult it is to implement, a new economic paradigm is urgently needed. And whilst detractors will say that this necessary restructuring will lead to the collapse of the economy, this is patently false. The economy, as most of us experience it, has nothing to do with economics. Economics is a philosophical structure that connects only intermittently and accidentally to the physical reality of the planet we inhabit and even less often to economics of everyday life which involve the mustering of wealth for human sustenance and well being.
This amazing miracle of a planet, the only home any of us will ever have, the only known place in the universe that can support life as we know it, is dying. And you may well ask: how did we get here? What choices did our parents, grandparents and great-grandparents make that led us to this point.
The answer is they chose to believe and participate in the ‘miracle’ of economic growth. The fact is, the economic system requires more than money and natural capital to prop it up. It also requires our cooperation. Ultimately it is not our money but our beliefs and expectations, our habits, memories and desires that give power the current economic system.
If we are going to save the planet then we need to abandon the fantasy of infinite growth and begin the real and valuable work of engaging with an economy that will genuinely benefit both people and planet.
© Pat Thomas 2011. No reproduction without the author’s permission.