The End of Growth: Adapting to Our New Economic Reality (2 page)

To P. J., whose generosity makes my work possible —
and who keeps going even with the knowledge
that time and means work against us.

Contents

Acknowledgments

Introduction: The New Normal

1. The Great Balloon Race

2. The Sound of Air Escaping

3. Earth’s Limits: Why Growth Won’t Return

4. Won’t Innovation, Substitution,
and Efficiency Keep Us Growing?

5. Shrinking Pie: Competition and Relative Growth
in a Finite World

6. Managing Contraction, Redefining Progress

7. Life After Growth

Notes

About the Author

Acknowledgments

This book has benefited from the contributions of many people whose help deserves recognition.

I will start with the staff of Post Carbon Institute, the organization for which I am happy and proud to work. Asher Miller, Daniel Lerch, Ken White, and Tod Brilliant read the manuscript in various stages and offered key editorial suggestions. This team has also collaborated with me on related projects — including short YouTube videos such as the award-winning“300 Years of Fossil Fuels in 300 Seconds” and “Who Killed Growth?” Crystal Santorineos transcribed interviews and Simone Osborne published excerpts from the book on
PostCarbon.org
and
EnergyBulletin.net
(readers of those excerpts in turn sent in valuable suggestions for the manuscript).

New Society Publishers also deserve thanks — especially Ingrid Witvoet, who edited the manuscript; Chris and Judith Plant, who responded enthusiastically to
The End of Growth
when it was no more than an idea; Sue Custance who helped shepherd the project along; and E. J. Hurst, who masterminded promotional efforts.

Jared Finnegan put his recent studies at the London School of Economics to use in offering informed editorial suggestions for the manuscript, and also in preparing the graphs and their captions — a task that involved gathering dozens of data sets from a variety of sources. Jared’s editorial input was especially crucial to the section “The End of ‘Development’” in Chapter 5.

Suzanne Doyle contributed many hours to compiling the Notes, finding sources and keeping track of hundreds of references.

My research for
The End of Growth
entailed interviews and conversations with many brilliant thinkers, each of whom deserves an introduction as well as my great thanks.

A conversation with Gus Speth — one of the giants of the environmental movement, who taught for many years at Yale (and now at Vermont Law School), and author of
A Bridge at the Edge of the World: Capitalism, the
Environment, and Crossing from Crisis to Sustainability
— brought me up to speed with recent developments in the world of alternative economics. Another conversation, this one with John Fullerton, formerly Managing Director of JPMorgan and more recently the founder of the Capital Institute, helped me understand the culture of Wall Street and how it evolved during the past quarter century. These days John is working on steering the investment world toward a just, sustainable, and resilient economy and is pioneering several promising efforts in that direction.

Herman Daly, pioneer ecological economist, former World Bank economist, and author of
The Growth Illusion
, generously agreed to read and comment on Chapter 6.

Nate Hagens, hedge fund manager-turned-ecological economist, read most of the manuscript and contributed many important suggestions; his expert knowledge of the workings of financial markets informed Chapter 2.

Josh Farley, Fellow of the Gund Institute for Ecological Economics and a Professor in the Community Development and Applied Economics faculty at the University of Vermont (and co-author with Herman Daly of the textbook
Ecological Economics
), read most of the manuscript and provided crucial guidance in several areas. A few of the explanatory Notes are lifted nearly verbatim from his comments in the margins of the manuscript. Hazel Henderson, futurist and author of
Ethical Markets: Growing the
Green Economy
, has been critiquing conventional economic theory for decades while offering alternative ways of making money work for people (rather than the other way around). Interviewing her helped open my thinking to possibilities I hadn’t considered, and I tried to capture these in Chapters 6 and 7.

Chris Martenson, creator of “The Crash Course” and veteran of ten years in corporate finance and strategic consulting, writes an ongoing series of commentaries about the world financial situation. Because Chris’s worldview is shaped by his awareness of resource limits and by systems thinking, I find his analysis particularly credible and useful. His insights are reflected in Chapter 2 and 3.

Nicole Foss is co-editor of
TheAutomaticEarth.com
, where she writes under the name Stoneleigh; she also runs the Agri-Energy Producers’ Association of Ontario, Canada, where she focuses on farm-based bio-gas projects and grid connections for renewable energy. While living in the UK, Nicole was a Research Fellow at the Oxford Institute for Energy Studies, where she specialized in nuclear safety in Eastern Europe and the former Soviet Union. I’ve benefited from reading many of her commentaries on the world financial scene, and Chapter 2 incorporates a number of important insights she conveyed during a long conversation in December 2010.

Charles Hall, Professor of Systems Ecology at State University of New York College of Environmental Science and Forestry in Syracuse, is the world’s principal authority on the subject of net energy, discussed in Chapter 4.While I owe a general, long-standing debt to Charlie’s research (whose importance is still unrecognized by many energy analysts), his most recent peer-reviewed publications provide crucial support to some of the core arguments in this book.

David Murphy, one of Charlie Hall’s former students and now an important researcher in his own right, is the author and co-author of key peer-reviewed papers on net energy cited in Chapter 4. David read that chapter and made important suggestions.

Michael Klare, Professor of Peace Studies at Hampshire College and author of
Rising Powers, Shrinking Planet
, is the world’s foremost authority on linkages between resource depletion and geopolitics. A conversation with him in late 2010 was the basis for the section “Post-Growth Geopolitics” in Chapter 5.

Bill Ryerson, founder and President of Population Media Center and President of the Population Institute, is the wisest, best informed, and most effective advocate for population issues I know. Our conversation laid the groundwork for the section “Population Stress: Old vs. Young on a Full Planet” in Chapter 5.

Mats Larsson, a management consultant and author of several books including
The Limits of Business Development and Economic Growth
, was an important source for Chapter 4, which he also read and commented on.

Jason Bradford, a former research biologist at Washington University and Missouri Botanical Garden, who currently leads the farmland management program for Farmland LP, read and commented upon much of the manuscript and drafted a sidebar for Chapter 7.

Warren Karlenzig, one of the world’s top experts on urban sustainability strategy and metrics, and author of
How Green is Your City? The
SustainLane U.S. City Rankings
, is a frequent traveler to China, where he consults with local authorities on planning issues. His insight into that nation’s predicament and prospects is reflected in the section “The China Bubble” in Chapter 5.

David Fridley, staff scientist at the Energy Analysis Program at Lawrence Berkeley National Laboratory and expert on China’s energy policy, also offered important input to “The China Bubble.”

Doug Tompkins, who enjoyed notable success in business and went on to become one of the world’s leading conservationists, read the manuscript and made helpful suggestions, while the Foundation for Deep Ecology provided material assistance for the promotion of this book.

Helena Norberg-Hodge, founder of the International Society for Ecology and Culture, has been a friend and inspiration for many years; her perspective is explicit in the section “The End of ‘Development’” in Chapter 5, but also subtly flavors Chapters 1 and 6.

These expert readers and sources kept me from making many mistakes that would otherwise have compromised the core message of
The End of
Growth
. Any errors that remain are my sole responsibility.

I am also deeply indebted to the work of Dennis Meadows and Jorgen Randers — the surviving members of the original Limits to Growth research group. If the world had listened, today we would all have much less to worry about.

Finally, I would like once again to thank my wife Janet Barocco for her tireless support and encouragement, and for helping make our home a place of artistry, good humor, and natural beauty.

Introduction: The New Normal

Leading active members of today’s economics profession...have
formed themselves into a kind of Politburo for correct economic
thinking. As a general rule — as one might generally expect
from a gentleman’s club — this has placed them on the wrong
side of every important policy issue, and not just recently but
for decades. They predict disaster where none occurs. They
deny the possibility of events that then happen.... They oppose
the most basic, decent and sensible reforms, while offering
placebos instead. They are always surprised when something
untoward (like a recession) actually occurs. And when finally
they sense that some position cannot be sustained, they do not
reexamine their ideas. They do not consider the possibility of a
flaw in logic or theory. Rather, they simply change the subject.
No one loses face, in this club, for having been wrong. No one
is dis-invited from presenting papers at later annual meetings.
And still less is anyone from the outside invited in.

— James K. Galbraith (economist)

The central assertion of this book is both simple and startling:
Economic
growth as we have known it is over and done with
.

The “growth” we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it.

The economic crisis that began in 2007–2008 was both foreseeable and inevitable, and it marks a
permanent
,
fundamental
break from past decades — a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. There are now fundamental barriers to ongoing economic expansion, and the world is colliding with those barriers.

This is not to say the US or the world as a whole will never see another
quarter or year of growth relative to the previous quarter or year
. However, when the bumps are averaged out, the general trend-line of the economy (measured in terms of production and consumption of real goods) will be level or downward rather than upward from now on.

Nor will it be impossible for any region, nation, or business to continue
growing for a while
. Some will. In the final analysis, however, this growth will have been achieved at the expense of other regions, nations, or businesses. From now on, only
relative growth
is possible: the global economy is playing a zero-sum game, with an ever-shrinking pot to be divided among the winners.

Why Is Growth Ending?

Many financial pundits have cited serious troubles in the US economy — including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble — as immediate threats to economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will resume at “normal” rates. But the pundits generally miss factors
external
to the financial system that make a resumption of conventional economic growth a near-impossibility.
This is not a temporary condition; it is essentially permanent
.

Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:

• The
depletion
of important resources including fossil fuels and minerals;

• The proliferation of
negative environmental impacts
arising from both the extraction and use of resources (including the burning of fossil fuels) — leading to snowballing costs from both these impacts themselves and from efforts to avert them; and