The current economic paradigm we are immersed in, is that the only way to achieve prosperity, is through continuous economic growth or the increase of gross domestic product (GDP). This same paradigm applies in every country, rich or poor, developed or still developing and demands economic ‘growth’ into the future in an indefinite upward spiral. This has worked pretty well for the last 150 years, fuelled primarily by cheap high quality (energy return on energy investment per unit) fossil fuel – an energy resource that is a limited ‘subsidy’ borrowed from the past to drive present growth.
Modern economics operates on the basis that limitless growth is the goal. The problem is that the economic system is an ‘open subsystem’ of a broader closed system, which is the biosphere. The biosphere is a system that does not grow – we have one planet that is not getting any larger. It has limits.
The global economic system requires ‘inputs’ from the environment (in the form of raw natural resources), which are then mixed with human technology to produce goods and services. Once these goods and services are used, waste and pollution are then exited out of the economic system back into the environment in quantities now beyond the limits of the biosphere to sustainably handle. Both the inputs (natural resources) and the outputs (the waste) are treated in economics as ‘externalities’. That means that (in economic terms) we ignore them. They don’t count when we add up how we’re doing in GDP growth. This is an attractive fiction with one major problem. The biosphere is our life support system. Without it, the human world including the global economy can’t exist.
Notwithstanding the complexity of modern economics, at its heart lies this simple fallacy. It ignores and externalises the necessary inputs and outputs of the biosphere that it needs to function, and thereby ignores the planet’s ecological limits. Why do we ignore this? Because in the past, it hasn’t really mattered. We could grow and pollute as much as we liked without any consequences. That is the story behind the extraordinary explosion of growth during the 20th Century. Human population sat at levels where we weren’t affecting the biosphere at the global level with our activities. However in the age of the Anthropocene, we exist in such large numbers that this is no longer the case. Population alone doesn’t tell the whole story however. Consumption per capita in the developed countries far outstrips that of the poorer countries. We are all now beginning to be affected by our own waste products as they mix with the water, the air and the soils.
We are caught in a prisoner’s dilemma. Growing GDP (measuring the amount of ‘stuff’ we produce) is the engine that maintains modern lifestyles. Getting off this moving train seems scary and impossible. Economic growth is the only tool we currently use to ‘grow’ developing countries out of poverty. We don’t seem to have the moral resources to seriously consider sharing. Just think back to the last time someone threatened your own physical or emotional security, even in a minor way.
The belief that technology and ‘human capital’ will always be able to replace ‘natural capital’ is generally relied on to get around the problem that we are destroying the environment. We’ve got through OK so far and will “find a way”- such is the nature of our genious. However relying on the past to predict the future carries high risk. Sometimes you don’t find a way! It is worth remembering that Capitalism has always required (an unpaid for) ‘surplus’ in order to grow. Each time it’s hit limits, new surpluses have been found and then apropriated from outside the existing economic system. Examples are: colonisation of new countries with more resources, the reliance on unpaid work first of slaves then of women, the discovery of fossil fuels holding previously undreamt of levels of energy ‘density’, and now finally globalization of trade, achieving efficiencies through breaking down domestic markets and labour barriers to extract growth by bypassing national social and environmental rules, allowing still more production and consumption.
We are reaching a point however where there are few surpluses left to utilise. Once surplus in capitalism wanes, growth slows. The incentive to produce without profit disappears. Why bother doing something that can’t produce a return? This is why the peak oil discussion is something of a red herring. It is not how much oil is left that matters but at what point the cost of extraction in ever more difficult areas outweighs the return achievable from that extraction. Looking around the global economy, slowing of growth seems to be happening despite best efforts to kick start it.
Essentially what’s required is a burst of human creativity- destroying the old and creating a new mental model of how the economy can ‘work’. We’re good at this kind of thing when faced with disaster, but only if we recognise first that there is a problem. Think for example of the Roman empire that failed to recognise its own internal systemic problems leading to gradual collapse. Our economic model is not made of hard unbreakable physical laws like science but of human socially agreed upon ones.
What if there is another way of thinking about the human relationship to the earth. One where we act as stewards of the environment for ourselves, our children and their children. Perhaps it means the unthinkable… that we limit our population and consumption levels and think about the relativity and scale of the global throughput economy in relation to the actual size of the planet. John Stuart Mill recognised this would eventually be necessary a long time ago. Perhaps it means a move beyond an endless growth model to a steady state economy with new economic measurements for wealth and prosperity that internalize real costs and recognize values beyond those we currently hold. Perhaps it’s an opportunity to re-imagine what lies beyond meeting our basic physical needs, and re consider what actually ‘produces’ human happiness and well-being.
