The No-Nonsense Guide to Degrowth and Sustainability. Wayne Ellwood
ethically better was the only justifiable purpose of economic striving.’12
Georgescu-Roegen and The Limits to Growth
Like Frederick Soddy, the Romanian-American economist Nicholas Georgescu-Roegen was also a pioneering critic of economic growth. In his 1971 book, The Entropy Law and the Economic Process, Georgescu-Roegen refined Soddy’s analysis, arguing that the human economy is a thermodynamic system, which is ultimately dependent on the physical world and therefore constrained by what he termed ‘bio-economic’ limits. Entropy, he said, increases inexorably and eventually runs head on into the finite material basis of growth. Low-entropy energy and materials are combined to turn natural resources into goods, services and the inevitable waste products. It is therefore impossible to escape the limits of the physical world and the inexorable decline in the capacity of energy to do work. This perpetual winding down thus defines the limits of the human economy. Georgescu-Roegen developed his own fourth law of thermodynamics which says, in part: ‘in a closed system, the material entropy must ultimately reach a maximum’ which implies that ‘complete recycling is impossible’.13 He spoke of natural resources in terms of ‘renewable and non-renewable stocks’ and ‘flows’.
These terms are now widely used in the burgeoning field of ecological economics. As the key modern theorist of entropy, Georgescu-Roegen’s analysis was a major influence on this increasingly important field of study. His thought also shaped the enormously influential Club of Rome report, The Limits to Growth, published in 1972. In fact, Georgescu-Roegen was a close friend and confidant of Dennis Meadows, the young Harvard systems-management expert who spearheaded the groundbreaking study.
The Limits to Growth was a runaway bestseller that forcefully put the question of growth and the environment on the public agenda. It sold 12 million copies and had such wide-ranging influence that US President Jimmy Carter even commissioned a report from the Council on Environmental Quality to look at how limits to growth might impact the US economy. The report found that ‘if present trends continue, the world in 2000 will be more crowded, more polluted, less stable ecologically and more vulnerable to disruption than the world we live in now. Serious stresses involving population, resources and environment are clearly visible ahead.’14
The Limits to Growth was a watershed because it raised fundamental questions about endless growth on a finite planet. Meadows and his colleagues used Massachusetts Institute of Technology computers to examine economic growth since the industrial revolution – this was 1972 and the use of computers to make this kind of scientific projection was in itself revolutionary. They primed the machines with data on resource use, food production, land use, population, industrial production, pollution and a host of other variables, including non-linear feedback loops between the various data sets. They then crunched the numbers and came out with extrapolations of what might happen in the next century. Their conclusions were stark and a little scary in the booming 1970s. With capitalism triumphant and the system humming along, decision-makers didn’t really want to bother thinking about such things. The report concluded that, if current growth trends continued, the global economy would hit the wall sometime in the 21st century. The gradual depletion of natural resources and the fouling of the environment would combine to increase prices, collapse living standards, level populations and stop growth in its tracks. Meadows and company did not say this was inevitable, just likely without major changes to the dominant system of industrial production. Nonetheless, they came in for a barrage of criticism from both Left and Right.
From the Left the concern was that the Club of Rome that commissioned the Report was an élitist cabal of technocrats out to sabotage the poor by shutting off the growth tap. Instead of consumption, resource use and environmental limits, they focused on population and inequality, dismissing the ‘limits’ arguments as both premature and irrelevant to the pressing problem of poverty and social justice. The Right also dismissed The Limits to Growth as specious scare-mongering in a time of obvious abundance in western Europe and North America. Few mainstream economists lauded the work; most saw it as technically flawed, falling back on standard neoclassical economics to underscore their criticisms. They were especially exercised because the data failed to take into account the role of new technology and the ‘price mechanism’ – the notion that higher prices, by stimulating new supplies and encouraging substitution, can side-step resource depletion and open the way to perpetual growth.
Neither side really grasped the point: that we are on a collision course with the natural limits of the planet, living off our capital rather than our interest. The day of reckoning will come. We can do something about it, or we can ignore it. The choice is up to us.
In 2004, the authors published Limits to Growth: the 30-Year Update, which used essentially the same model as the original but updated the data. The results echoed the findings of 1972.
As physicist and climate blogger Joe Romm told Thomas Friedman of the New York Times: ‘We created a way of raising standards of living that we can’t possibly pass on to our children. We have been getting rich by depleting all our natural stocks – water, hydrocarbons, forests, rivers, fish and arable land – and not by generating renewable flows.’15
By the mid-1970s the critics had won. Concerns about limits to growth began to recede from public debate. Yet the report’s findings continued to resonate in the burgeoning environmental movement. Indeed, Limits to Growth changed the language of environmental discourse and gave birth to the field of ecological economics where growth is the central focus. The Club of Rome report put in place the notion of renewable and non-renewable ‘stocks’ and ‘flows’ of natural resources. And these concepts set the stage for what we’ll look at in the next chapter.
What are the limits of our energy and raw materials? Can efficiency, producing more with less, solve our problems?
1 Darwin’s original title was: On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life.
2 Herman Daly, Beyond growth: the economics of sustainable development, Beacon Press, 1996.
3, 4 Cited in Bill McKibbon, Deep Economy, Holt, 2008.
5 Brian Milner, ‘Global outlook turns darker’, The Globe and Mail, 9 Oct 2012.
6 Suzanne Daly, ‘Spain Recoils as Its Hungry Forage Trash Bins for a Next Meal’, New York Times, 24 Sept 2012.
7 Earth Policy Institute, www.earth-policy.org/data_highlights/2011/highlights18
8 Growth isn’t possible, New Economics Foundation, 2010.
9, 10 John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy, Book 4, 1848.
11 Frederick Soddy, Wealth, Virtual Wealth and Debt: The Solution of the Economic Paradox, Dutton, 1926.
12 Robert Skidelsky, John Maynard Keynes, 1883-1946: Economist, Philosopher, Statesman, Penguin, 2005.
13 Cited in Christian Kerschner, ‘Economic de-growth vs steady-state economy’, Journal of Cleaner Production 18, 2010.
14 Peter A Victor, Managing Without Growth, Edward Elgar, 2008.
15 Thomas L Friedman, ‘The Inflection Is Near?’, New York Times, 7 Mar 2009.
EF Schumacher laid out the idea of the Earth’s ‘natural capital’ on which humanity depends. But those resources are being consumed faster with every passing year – and technological improvements and efficiency savings are utterly unable to keep pace. The Earth’s sinks are now overflowing – and we are starting to pay a heavy price.