Beyond Growth

So as many of you know I’ve been reading “Beyond Growth” by Herman Daly for the last little bit. The book overall is excellent, although it presupposes a decent amount of economic knowledge by the reader. That being said, I think the average reader will still get a lot out of it. Moreover, the central themes are crucially important to our times and the choices we make both individually and collectively. In fact I would submit that the choices we make in regards to this subject will have a huge impact on the future quality of life for all species on this planet for hundreds if not thousands of years. Of course many of the conclusions he reaches are unpleasant at best and therefore will be politically hard to achieve. After all they require something that is never in vogue namely self sacrifice. However, just because a choice is unpleasant doesn’t mean that it shouldn’t be made. As anyone who is an actual adult (mentally not just physically) knows, sometimes hard choices must be made now or very painful consequences will result later.

The first and probably overriding point that he makes is that the earth’s environment is a finite system composed of finite resources. This should really be an easy point to make. For example, do you think the earth is still growing either in size or resources? Or is it instead still the same size. If you can correctly deduce that the earth is in fact remaining the same size then you must accept that the environment and resources are remaining constant as well. Now this is not to say that changes don’t happen in composition of the resources (grassland might change to desert or forest etc) but that no growth of the overall resource base is occurring. Now the next step is to realize that humans and our economy depend on the environment. We depend on it to provide clean air and water, as well as a source of natural capital (raw materials) and as a sink for our waste. Therefore since our environment is not growing, it stands to reason that our economy can only get to be so big in relation to the environment. In addition, as our economy gets larger, the rest of the natural environment gets smaller with a resulting reduction in the benefits that the environment provides. Crucially if we try and grow our economy too big it will eventually cripple the basic environmental functions that we depend on for life itself.

If we accept that the environment is finite then the economy must also have a limit then to how large it can grow in relation to the environment. Any further growth beyond is actually uneconomic because the costs (in reduced natural services) outweigh the benefits that we get from further growth of the economy. And as we push further past the optimal size of the economy the costs of growing will increase exponentially. If we can accept all this then we are accepting that the economy cannot grow without limit. Our quest to continuously grow GNP is not only impossible but also uneconomic after a point. Therefore we must ask how big do we want the economy to be in relation to the environment. Also, what is the optimal point after which growth of the economy actually costs more than the benefits that result. Some might argue that we have already passed the optimal point, and at the minimum the point is close at hand. One has but to look at the increasing overloads of natural systems such as fish stocks, or waste disposal sinks such as the atmosphere and the ocean to realize this is the case. And while the optimal size of the economy can be argued, the important thing is that we switch away from a growth economy that is not sustainable and transform into a development economy. An easy way to differentiate between growth and development would be to say that growth requires the use of more resources while development increases the efficiency of resources use. Therefore while growth is limited by our natural and finite world, development is only limited by human ingenuity and resourcefulness.

Now having accepted that we must place a limit on the growth of the economy it’s helpful to look at the two different parts of the economy that drive consumption and thus resource use and/or growth. Consumption is population multiplied by per capita consumption. Therefore if overall growth and thus (without further development) consumption is limited we have two choices to maintain that limit. If population increases we must decrease per capita consumption, or if we want to increase per capita consumption we must decrease population. Of course neither of those choices is normally popular. People don’t like to be told either how much they can consume, or how much they can populate. But unfortunately this being the real world, our wants often have little to do with reality. Moreover, if we ignore reality and continue on our current path we will experience what has been termed overshoot and collapse. A simple example, say there are two species on an island wolves and rabbits. As long as the wolf’s population remains small enough in proportion to the rabbit population then they can continue pretty much indefinitely. But say that the wolf population starts to grow. The increased amount of wolves will need to consume an increased amount of rabbits. But as more wolves consume more rabbits, the rate of rabbit reproduction will actually decrease which will make it ever harder for the wolves to stay fed. As we follow this to its logical conclusion the wolves will continue to feed on the rabbits until the rabbit population is so devastated that there is a massive wolf die off due to starvation. Of course wolfs are not self aware, they due not limit there own reproduction to stay within the limits of their environment.

This example is directly comparable to human existence on Earth. We to depend on nature to provide us with the resources and nourishment we need to stay alive. If our population grows too large it’s just as easy for us to devastate the environment we depend on to stay alive. The difference being that as self aware individual it shouldn’t be impossible for us to realize that the rabbit population is decreasing and thus we must halt our population growth (and consumption growth) to prevent possible future mass starvation (or other equally dire consequences).

However, as hard as the population growth might politically be to stop (no matter how necessary), equally troubling is the next logical step of limiting and/or shifting of consumption of resources. For example right now the USA with 6% of the world population consumes about 33% of the world’s resources. Of course the rest of the world would like to consume at the same level as the USA, but look what happens when we try to generalize our consumption patterns. If 18% of the world’s population consumed as much as the USA that would consume all the worlds’ current production of resources (and sinkage of wastes), what then would the other 82% of the world consume? If you wanted all 100% to consume at the same level as American that would require 5.56 times the total resource production of the entire world. To make it simple think about 5.5 times demand for oil what would the gas prices be (and how quickly would we drain every last drop) or how much rain forest would we be loosing each day to satisfy the paper needs for 5.5 times our current demand. And how would our fisheries already fished to the collapsing point in many cases produce 5.5 times more fish? The simple common sense answer is of course they cannot. The world simply cannot produce enough resources or absorb enough waste for even our current population to all enjoy the American lifestyle, much less a steadily increasing one. Of course increase in technology (aka development) will continue to allow for more efficient use of resources, but how much more efficiently can you use say the wood to build a house? Will better or more saws mean that less wood is used? The fact is that technology is an amazing thing but it to has limits. And none of the technology in the foreseeable future (and most likely ever) will remove the limits of resource use.

Therefore as people in the southern nations understandably want to increase there consumption, it will most likely require countries in the north to moderate their consumption to achieve anything near an equitable solution. If the countries in the north are unwilling, then why will the countries in the south behave? North and South will instead just consume their way into a devastated environment with all the problems that will result from such. Here again it’s very similar to the idea of fisheries. Each country can either, try to consume as much as they want with the end result being no fish, or they can all work together to limit their own catches and so insure a sustainable harvest in perpetuity. Now just because some changes of consumption patterns will undoubtedly be necessary, do not think I am advocating some kind of mass redistribution of wealth, or that we must strive for some communist society where everyone has exactly equal consumption. Instead it is just to recognize that if we limit the overall size of the economy in relation to the environment then some shifting of consumption from north to south must occur at a minimum to bring the south up to some base standard of living. And of course in conjunction with that the North, but especially the South must limit population growth. Otherwise whatever consumption is sacrificed by the North is bring up the South’s standard of living will instead be gobbled up by an ever increasing population. The result will be a never ending cycle of poverty in the South.

The last point I will touch on for now from the book is the idea of the measurement of income and GNP. First lets define income. Income is the amount you can consume either from interest or labor without reducing your stock of capital. For example, if you have $100 of resources at the beginning of the year, and you produce (or nature produces) $10 worth of resources during the year, then you can consume $10 during the year without reducing your base capital. The problem with our current systems of accounts is that to often we count the reduction of capital as income. But if you have $100 in your bank account and then spend it all, is that income? Or have you actually just spent all your savings or capital. It should be quite clear that you have spent capital and that therefore it should not be counted as income. Why then does our current system of accounts count the reduction of capital as income? If you pump all the oil from a field have you earned income? Or have you instead spent your capital. If we fish more fish than are produced in a year shouldn’t those extra fish be counted as a reduction of capital instead of an increase as income? GNP counts each decrease in capital as if it were income, and then we go about consuming that capital as if it was income instead. But what will we do when the capital runs out? Why the party will be over of course. Moreover, as we use up more capital each year the interest we earn off the capital decrease which results in an ever increasing use of capital. IE, we rush quicker to our doom.

The other half of the GNP problem is it currently counts costs as benefits. Did hurricane Katrina come through and leave a path of destruction in its wake. No matter our efforts to rebuild will just increase GNP. What about when an oil tanker spills Hurray, more GNP growth. In fact, all the costs of environmental protection that we must pay for our over consumption our instead being counted as benefits and increasing GNP. What sense does that make? If your water heater explodes and you have to replace it, is that a cost or a benefit. It rightly should be counted as a cost, but GNP increases so we are counting it as a benefit. Or maybe you suffer Lung problems from all the pollution in the air and must seek medical treatment, shouldn’t that be a cost? But not instead it increases GNP and so is considered to be a good thing.

Therefore to move towards a sustainable world, we must first realize that there are limits to how big the economy can grow in relation to the environment, and decide on an equitable basis for resource use between the North and South combined with limits to population growth. In conjunction with that we must change our methods of measuring progress to one that actually measures progress. We should only count as income in each year that which is actually income. That is the amount we can consume without reducing our capital. Finally we can then focus on development. How to increase our quality of life by increased growth in efficiency of resource use as well as other methods of social growth (the arts etc).

I thank everyone that has actually read this far, I know this isn’t always the most glamorous topic, but in many ways it’s one of the most important. I’ve tried to provide a summary of many of the most important topics in the book, but I of course encourage you to read it yourself. I also realize that many of these ideas will be hard both personally and politically to implement. But I also believe that failure to do so will most likely result in extremely unpleasant consequences. Of course if anyone would like to discuss any of these ideas in more detail feel free to ask.

Thanks again for taking the time to read this,