Nothing Grows Forever | IDEAA IT

Nothing Grows Forever

Why do we keep thinking the economy will?
—By Clive Thompson | May/June 2010 Issue, Mother Jones

Illustration: Jon Han
PETER VICTOR is an economist who has been asking a heretical question: Can the Earth support endless growth?

Traditionally, economists have argued that the answer is “yes.” In the 1960s when Victor was earning his various degrees, a steady rise in gross domestic product (GDP)—the combined value of our paid work and the things we produce—was seen as crucial for raising living standards and keeping the masses out of poverty. We grow or we languish: This assumption has become so central to our economic identity that it underpins almost every financial move our leaders make. It is to economics what the Second Law of Thermodynamics is to physics.

But Victor—now a professor at York University in Toronto—felt something tugging him in the opposite direction. Ecologists were beginning to learn that Earth does have limits. Pump enough pollution into a lake and you can ruin it forever; chop down enough forest and it might never grow back. By the early ’00s, the frailties of the planet were becoming even more evident—and unsettling—as greenhouse gases accumulated and chunks of Greenland’s glaciers began breaking off into the sea. “We’ve had 125,000 generations of humans, but it’s only been the last eight that have had growth,” Victor told me. “So what’s considered normal? I think we live in very abnormal times. And the signs are showing up everywhere that the burden we’re placing on the natural environment can’t be borne.”

In essence, endless growth puts us on the horns of a seemingly intractable dilemma. Without it, we spiral into poverty. With it, we deplete the planet. Either way, we lose.

Unless, of course, there’s a third way. Could we have a healthy economy that doesn’t grow? Could we stave off ecological collapse by reining in the world economy? Could we do it without starving?

Victor wanted to find out. First, he created a computer model replicating the modern Canadian economy. Then he tweaked it so that crucial elements—including consumption, productivity, and population—gradually stopped growing after 2010. To stave off unemployment, he shortened the workweek to roughly four days, creating more jobs. He also set up higher taxes on the rich and more public services for the poor, and imposed a carbon tax to fill government coffers and discourage the use of fossil fuels. The upshot? It took a couple of decades, but unemployment eventually fell to 4 percent, most people’s standards of living actually rose, and greenhouse gas emissions decreased to well below Kyoto levels. The economy reached a “steady state.” And if the model is accurate, then something like it, say some ecologically minded economists, may be the only way for humanity to survive in the long term.

Victor’s economic theory is radical, but he is not alone. Over the past few decades, a handful of scholars have been laying the intellectual groundwork for “no growth” economics, and several recent books have proposed design principles for a healthy, nongrowing global economy. Even some of the world’s major governments, spooked by the twin specters of global warming and the recent financial crisis, have begun exploring this seemingly subversive idea: In 2008, French president Nicolas Sarkozy asked Nobel economics laureate Joseph E. Stiglitz to draft new ways to measure prosperity without relying on GDP as the main indicator. But what would a no-growth society look like? Would we like it? And could we build one?

Americans’median family incomes have increased about  85%  since 1957.
Our average assessment of our own happiness has decreased by  5%.

THE IDEA IS actually quite old. Even Adam Smith, the great-great-grandfather of capitalism, acknowledged that it might be possible for an economy to max out its natural resources and stop growing. In the 19th century, economist-philosopher John Stuart Mill argued that growth was necessary only up to the point where everyone enjoyed a reasonable standard of living. Beyond that, he said, you could achieve a “stationary state” that would move past the “trampling, crushing, elbowing, and treading on each other’s heels” that he saw in unfettered capitalist growth. In 1930, John Maynard Keynes likewise predicted a period in the future—possibly as soon as his grandchildren’s time—when the economy wouldn’t need to grow (pdf) further to meet our basic needs. Man’s “economic problem” would be solved, and people would “prefer to devote our further energies to non-economic purposes.” Things like art, child rearing, and leisure.

Yet no-growth theory never took off. Politicians came to see growth as a hedge against deficit spending and high unemployment—that political third rail—and economists figured that extended periods of growth were needed to lift people out of poverty. So Western governments fine-tuned their policies—imposing lower taxes on capital gains than on labor, for example—to promote growth by rewarding investment. The obsession with growth was also a practical matter, since it seemed like the most reliable way to gauge the prosperity of a country. The methods used to measure things like happiness, for instance, aren’t objective enough to satisfy most economists. Instead, they looked to GDP as the primary benchmark for whether things are getting better or worse.

Classical economists didn’t spend much time worrying about whether the environment could support infinite growth. During the formative years of industrial-age economics, after all, resources did seem limitless. (Early California residents recalled salmon so bountiful that you could practically cross streams on the backs of the fish.) Plus, there was the problem of pricing: Economics doesn’t account for things it can’t price, and nobody could easily put a number on the cost of, say, polluting the Great Lakes, or driving a species to extinction by clearcutting its forest habitat.

It didn’t help that the few early economic thinkers who did worry about exhausting the planet turned out to be a couple of centuries premature. Beginning around 1800, Thomas Robert Malthus famously predicted that population was growing faster than the earth could support. But his predictions of widespread global famine never came to pass, because technological improvements in agriculture made land far more productive than Malthus ever dreamed. He also failed to predict that rising prosperity would put the brakes on birth rates. (For an in-depth look at our population conundrum, see “The Last Taboo”.)

By the 20th century, growth had become not only an item of faith in economics, but a deeply held political belief. When Franklin Roosevelt supported grappling with Great Depression unemployment by decreasing the workweek to 30 hours, the largest corporations fought back fiercely. America, they argued, would be saved only by the new “gospel of consumption.” The administration would need to pursue flat-out growth, loosening labor laws and so forth, so that the industrialists could revive the nation. Roosevelt backed down.

THE NEXT major challenge to the pro-growth orthodoxy didn’t emerge until the early 1960s and publication of Rachel Carson’s Silent Spring. The first major book to examine the effects of pollution, it became a best-seller, awakening the mainstream to the idea that relentless economic activity might wreck the natural world. Alarmed by this notion, the Club of Rome—an international group of industrialists, scholars, diplomats, and professionals—asked a team of MIT scientists led by systems-management expert Dennis Meadows to determine what would happen if human society continued to grow at its current pace.

The scientists built a computer model that looked at the main components of world growth—including population increases and breakthroughs that make workers more productive. Crucially, they also calculated—as best they could—the effects of pollution and the extent of the planet’s natural resources, and put those in the model, too. Then they hit “enter.”

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