The Great Disruption (10 page)

2.   With the upper forecast of eleven billion people, it would require a reduction to 30 g CO
2
/$.

3.   If we assume that we deal with poverty and have nine billion people in 2050 at a per capita income equivalent to that in the European Union in 2007 (that is, no further per capita growth in the West), the target drops to 14 g CO
2
/$.

4.   If we assume every country is broadly equal and the standard of living is based on the EU in 2007 but grows globally at just 2 percent per year, then we need to achieve a reduction from 768 g/$ to 6 g/$, or a reduction of around 99.2 percent.

There are a few key lessons from these numbers.

First, they strongly reinforce that population growth, while material, is not the key driver of the problem compared with per capita economic growth.

Second, they show that the scale of change required is quite extraordinary. Even scenario three with a midrange population and equal incomes with
no
further growth in the developed world requires an improvement in efficiency of 9 percent
every
year for forty years and results in an economy
six times
as large as today's!

Third and most important, this is just the herculean task required to achieve action on climate with a growth economy. That is clearly the
easiest
challenge compared with finding the forest, land, fish, food, transport, minerals, and water to feed an economy six times the size of today's.

Further complicating this strategy is what is known as “the rebound effect.” What happens when products become more efficient is that we use more of them. So as cars become more fuel-efficient through better engine technology, we make our cars heavier; as home appliances become more efficient in power use, we buy bigger ones; as air-conditioning becomes more efficient and therefore cheaper, we air-condition more homes. This means that as long as we consider only technology, rather than also considering per capita consumption, we'll keep bouncing back and hitting the limits again.

As I said earlier, the
Prosperity Without Growth
scenarios consider only CO
2
emissions, a significant challenge but still possible. But given that decoupling is about every resource that feeds the modern economy and we're operating at 140 percent of capacity now, there is no conceivable decoupling scenario involving economic growth that sees us bringing the situation under control in time to avoid a crisis.

As the report itself concludes:

The truth is that there is as yet no credible, socially just, ecologically sustainable scenario of continually growing incomes for a world of nine billion people. In this context, simplistic assumptions that capitalism's propensity for efficiency will allow us to stabilise the climate or protect against resource scarcity are nothing short of delusional.

Those who promote decoupling as an escape route from the dilemma of growth need to take a closer look at the historical evidence—and at the basic arithmetic of growth. Resource efficiency, renewable energy, and reductions in material throughput all have a vital role to play in ensuring the sustainability of economic activity. But the analysis in this chapter suggests that it is entirely fanciful to suppose that “deep” emission and resource cuts can be achieved without confronting the structure of market economies.

I'm most certainly not dismissing the core idea of decoupling or greater resource efficiency. There are enormous benefits on offer in such a strategy, and we will have to pursue it vigorously. My question at this point is simply, “Can we avoid a systemwide crisis?” and my conclusion is that decoupling and efficiency will not come close to that objective, even though they must be pursued for other reasons.

To summarize where we are at this stage:

• We have established that the challenge we face is clear, logical, scientifically based, and broadly accepted.

• We have identified that bringing the earth's economy within its operating limits is a herculean task with the size of our present economy.

• The math indicates it is an inconceivable task if we carry on growing the economy even modestly.

• It is clear that markets and technology will not be capable of adjusting at the scale required.

• We have observed that despite all this evidence, humanity is not yet responding with any substantial action at the global scale, let alone with the massive warlike intervention we clearly need.

• The science tells us that the lag in the ecosystem between emissions and impact means there is now great momentum racing through the system toward us.

• The lack of response to date indicates that the inertia against change in human society and the global economy is very powerful. Given that the change we need to make is much, much greater than the change we're already resisting, it is clear this resistance will continue and probably strengthen.

• This means any hope that we can mobilize the massive intervention required to
avert
the crisis is a false hope.

In combination, this evidence all points to one conclusion. We cannot now avoid the crisis of the Great Disruption.

How will this manifest?

If you thought the financial situation in 2008 was a crisis, and if you thought climate change was a cultural, economic, and political challenge, then hold on for the ride. We are about to witness humanity deal with its biggest crisis ever, something that will shake it to the core—the end of economic growth.

CHAPTER 5

Addicted to Growth

The global economy is almost five times the size it was half a century ago. If it continues to grow at the same rate the economy will be 80 times that size by the year 2100.

So explains Professor Tim Jackson, who is being joined around the world by a chorus of experts now arguing that we have to question economic growth. It seems so obvious to question growth. Indeed, as argued by economist Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Yet growth is the underlying driver behind all economic policy and a sacred tenet of global capitalism.

The numbers referred to by Jackson and others clearly show we will inevitably see an end to economic growth at some point. While there is debate on the timing and the trigger, it is hard to argue that growth can continue forever. As we showed earlier, dramatically increasing efficiency or decoupling material growth from economic growth may at best buy us a bit of time. However, at some point we are going to have to face the reality that we live in a finite world.

So does this really pose a challenge? Can't we just transition with a few bumps along the road to a new model, recognizing the game is up on the old one?

Yes, we will transition, but the bumps will be more like earthquakes and the transition will shake us to the core, forcing a substantial rearrangement of human values, political systems, and our physical lives. There are two reasons for this. One is that we won't change until we're forced to by actually hitting the physical limits, meaning we'll change rapidly and through a crisis. The second reason is that growth is interwoven into the fabric of modern society. We'll come to crisis later, but first let's take a good look at growth.

I mentioned earlier that a few years ago I shifted the focus of my speeches from the unfolding global ecological tragedy to the short-term economic implications of ecosystem breakdown and resource scarcity. I particularly focused on the inevitable end of economic growth. As a result, the response of my audiences shifted from earnest concern and broad agreement to genuine engagement and serious controversy.

Then and since, the issue that grabs attention about my Great Disruption thesis is not the demise of 50 percent of global biodiversity, or the civilization-threatening changes to the global ecosystem over the coming century, or the potential for the reshaping of the global geopolitical landscape. No, what grabs attention is the prospect that we are facing the immediate end of economic growth.

We just love growth; it frames the political and economic strategy of every government in the world, democratic or not. It frames the strategy of every company and certainly determines the longevity of board directors, CEOs, and corporate executives in their roles. It is not, however, just about “those in charge,” it is for most people one of the key measurements of progress through life. We generally consider our success over time in the context of whether we see growth in our levels of assets, income, and financial security along with all the material manifestations of this, in our homes, cars, and lifestyles. We have also linked this to our emotional security and sense of self-worth.

So because growth is so closely entwined with our economic system and our personal and political expectations the end of growth is not going to be a smooth process. As population grows, we need more jobs, and that requires growth. That becomes more difficult because technological efficiency and productivity improvements drive down the number of people needed to create the goods we produce. If the economy doesn't grow fast enough to overcome these efficiency improvements and deal with population growth, unemployment goes up, spending goes down, fewer products are produced, and fewer jobs are created. So growth gives us a high when it's happening and a nasty crash when it's not. It's an addictive cycle that will be hard to kick.

Our addiction to growth is a complex phenomenon, one that can't be blamed on a single economic model or philosophy. It is not the fault of capitalism or Western democracy, and it is not a conspiracy of the global corporate sector or of the rich. It is not a bad idea that emerged in economics, and it is not the result of free market fundamentalism that emerged in the 1980s with globalization. While each of those factors is involved, it is too simple and convenient to blame any of them as the main driver. Growth goes to the core of the society we have built because it is the result of who we are and what we have decided to value.

So the fact that it is finished, at least in its current material form and indeed in any form for some decades to come, is going to strike at the heart of modern society. While the end of growth is actually a symptom of the underlying crisis—the crash of the global ecosystem—it is this symptom that will be seen as the actual crisis, at least initially.

This is because a growth-based economy has gone well beyond being a policy, a desire, or a mode of operating that is judged to be superior to the alternatives. As we have seen, growth is now an addiction—and addicts resist change with increasingly complicated, desperate, and (in the end) delusional excuses. Anyone who has dealt with an alcoholic or other addict knows that denial, in the face of mounting evidence, slips slowly into lies and deceit. The justifications as to why the addiction is not an addiction and why the consequences are not as bad as they seem get more and more bizarre and separated from any objective reality.

It changes only when the consequences of the addiction become so overwhelming, direct, and all-encompassing that self-delusion can no longer be maintained and a decision to change breaks through the fog of denial.

This is how it will be with economic growth.

I want to be crystal clear here that I am not arguing
in favor of
the end of economic growth. I certainly could do so because there are credible arguments that economic growth no longer serves its own purposes of improving the quality of life for those out of poverty. We will return to this later. The desirability of growth is largely irrelevant to the coming crisis because that will not be the driver of change.

What I am arguing is that growth has effectively ended for reasons that are now locked in. We need to adjust to this new reality because it will trigger a global crisis, and how we respond to this crisis will determine the future of humanity, not to mention the planet's ecosystem.

But first, back to the addiction. The idea and motivation behind growth is not bad. It's probably comparable to the use of alcohol. People drink for various relatively healthy and socially acceptable reasons: the desire to socialize and share an experience, the wish to break down barriers, the enjoyment of the taste, or a delight with the whole cultural package of production, flavor, and socializing such as that experienced by wine lovers. None of these things are bad or destructive in themselves. However, the death and tragedy caused by drunk driving, the health impacts to an alcoholic of excessive consumption, or the alcohol-fueled violence and abuse of family members can all be truly devastating.

Likewise with growth: There are many drivers behind it, and many results of pursuing it, that are good and have served humanity well. While it can be argued that it no longer serves us well, the original motivation was not bad. There is nothing wrong with wanting to improve your quality of life, to enhance your comfort, to increase your financial security in later years, or to enjoy quality entertainment.

Extreme poverty, by comparison, has no redeeming features. I make a distinction here between poverty and living a simple life, which some argue has inherent value. For others, simplicity is chosen from a religious belief that the lack of possessions enhances the clarity and focus of spirituality. But neither of those is poverty; both are lifestyle choices or belief systems.

True poverty stinks and the alleviation of it for many millions of people has been one of the great outcomes of economic growth over recent decades and has enhanced many people's lives. Likewise, going further back, economic growth enabled greater food security and urbanization and gave humanity the freedom for some people to specialize in roles that have considerably enhanced the quality of life for all of us. Examples include health services, energy technologies, and reliable food supply, along with sources of joy and insight such as music, art, and literature. Many of these developments have increased the true prosperity of our lives.

So the problem is not the idea of prosperity or its pursuit; the problem is the abuse and addiction of the drug at the center of our current economic model. This drug and the artificial “high” it delivers corrupts the reasonable and sensible pursuit of prosperity. This drug is the idea that increasing wealth, and in particular the material possessions bought with that wealth, is at the core of improving our prosperity.

The good news is that while we have an addiction problem, there are treatments in the advanced stages of development that are currently undergoing clinical trials. We now know when and how real quality of life improves and what causes these improvements. There has been extensive research and investigation under way around the world, the results of which we will return to. In summary, what it tells us is that we are pursuing economic growth aggressively without significant improvements in our lives, with the notable exception of those who are being brought out of extreme poverty.

However, despite the good news that we understand the problem and are on the way to defining solutions, we must be clear that we are definitely not yet ready as a society to face up to reality. Furthermore, the sustained period of continuing denial we are now in will not be easy. We are in the endgame, but we are not at the end.

Evidence of the scale of the challenge in accepting growth's limits was seen in the response to the global financial crisis in 2008. While there were some interesting measures to focus stimulus packages on environmental initiatives, particularly clean energy, the fundamental and overwhelming focus was to get economic growth going again at all costs. Governments around the world of all persuasions, from liberal leaders like President Barack Obama and Prime Minister Kevin Rudd in Australia to conservatives like Angela Merkel in Germany to Communists like President Hu Jintao in China, all threw money at the economy to get it growing. No significant political or corporate leader questioned this approach or the urgency of it.

This was despite the ample evidence that our obsessive focus on growth was actually one of the causes of the crisis. The provision of cheap credit to feed our addiction led to irresponsible investment by banks and irresponsible consumption by consumers, which in turn drove global environmental impact and accelerated resource constraint, all while delivering increasing inequity between the rich and poor. Our solution to the failure of this approach was to quickly get back to doing it again.

Karl Marx argued that religion was the opiate of the masses, but religion has largely faded in its effect in this regard. Perhaps the new opiate of the masses is material consumption, delivered to us all without regard for ideology, in the two decades leading up to the 2008 financial crash, by the likes of Chairman Hu of China and President George W. Bush of America.

Now that we are addicted to endless increases in material wealth, governments are trapped. They recognize that if they don't keep up the supply, there is a serious danger of rapid, unsupervised withdrawal leading to revolution, or at least of lost elections!

The reason I want to establish the level of addiction is to enable us to understand what's coming. You see, even though the evidence is all around us that growth is driving us off the cliff, we will now go into ever more fanciful explanations as to why it is not. We will not let go easily. Such is the nature of addiction.

Mind you, a certain level of resistance is understandable. While I am arguing that continued growth is impossible because it would have to defy the laws of physics, an unplanned lack of growth or economic contraction is very unappealing and socially destabilizing. We are to an extent trapped. Our current system is designed for growth; that's what keeps us employed, keeps services flowing from government via taxes, and keeps the poor believing that they can escape from poverty. Without growth or at least without the end of growth being carefully managed, there is a danger that the whole house of cards will come crashing down.

That's why we need to understand that growth is finished and that we must plan the transition to a new approach carefully. Leaving it to unfold by itself is a risky strategy.

Yet despite the current system being in a cycle of growth dependency, this was not a design feature put there by early economists; on the contrary, they understood the limits of growth.

John Stuart Mill, one of the founding fathers of economics, recognized both the necessity and the desirability of moving eventually toward a “stationary state of capital and wealth,” suggesting that it “implies no stationary state of human improvement.”
1
Even one of history's most influential economists, John Maynard Keynes, assumed that the time would come when the “economic problem” would be solved and that society would then “prefer to devote our further energies to non-economic purposes.”

The problem we face is that we've conveniently ignored both the desirability and the inevitability of the end of growth, and as a result we haven't planned for it. So not only do we have an addiction to the drug of material consumption, we have also entwined our lives, our culture, our political systems, and our economic structures in such a complex web with the growth monster that separation is going to be complex and traumatic.

We will cover many of the arguments as to why growth is failing us anyway and what we should pursue instead. As we do, however, remember this is relevant only to what comes after the crash. We face the end of economic growth regardless of our intentions, for reasons of physical constraint. When five hundred million people lose their livelihoods and one billion people their protein because fisheries collapse, growth for them will be a fading dream. If we have to eliminate the fossil-fuel industry to cut CO
2
emissions, we will have lost $3 trillion of economic activity. If we don't eliminate them, we will face runaway climate change with the potential for the loss of the insurance industry, the collapse of the food supply, and geopolitical crises and instability over water and refugees. If we get growth back on track as it was before 2008, then we will face peak oil and food shortages with prices soaring to new highs that stop growth again.