The Limits to growth debate
The 1950s and 1960s were a time of growing awareness of environmental
problems, with lethal smog in major cities, warnings that growing air pollution in New
York would make the city uninhabitable (Bird 1967), the Cuyahoga river catching fire,
and predictions of imminent mass starvation and environmental catastrophe from
unchecked population growth. Recognizing a crisis situation, developed nations were
taking important steps to address these issues; the United States for example created the
Environmental Protection Agency, extended the Clean Air Act and passed the National
Environmental Policy Act, Clean Water Act and Endangered Species Act all between
1970 and 1973.
Into this atmosphere Meadows et al. published Limits to Growth (1972), a report
on the results of a computer systems-model of the interactions between the human
economy and the planetary ecosystem that sustained and contained it. Focusing on
population growth, resource depletion, industrialization, pollution and food production,
and assuming exponential growth but finite resources, the model showed that existing
trends would lead to resource exhaustion in coming decades, with potentially catastrophic
consequences by the middle of the coming century, if not sooner. The only way to avoid
this outcome was to rapidly stabilize human populations, resource use and waste
emissions. The oil crisis of 1973 initially seemed to almost immediately confirm some of
their conclusions.
The Meadows report was certainly not alone it its conclusions. In ,The Entropy
Law and the Economic Process (1971), Georgescu-Roegen argued that our economic
system, like all physical systems, is subject to the laws of thermodynamics. The laws of
thermodynamics— matter-energy cannot be created or destroyed, useful energy
dissipates and disorder increases —limited the physical size of the economy on a finite
planet. The increase in entropy entailed by economic production requires compensating
inputs of low entropy energy, and the economy systematically converts low entropy
resources into high entropy waste, providing a flux of human welfare in the process. The
economy has access to two sources of low entropy to maintain this process—finite stocks
of fossil fuels and other natural resources which we can use as fast as we chose, and the
finite flow of solar energy, which arrives at a rate beyond our control. As finite stocks
become exhausted, the physical size of the economy will be limited by the flow of solar
energy. Eventually, all the material building blocks of our economy must become so
dispersed that the fixed flow of solar energy will be inadequate to recycle them, and the
economy must collapse. Economic growth can only speed our doom.
Herman Daly also recognized the limits to growth, but more optimistically
argued that a no-growth, steady state economy could be sustained indefinitely, (1973;
l977). However, the raw materials that serve as the inputs into economic production
alternatively serve as the structural building blocks of ecosystems. Structure generates
function. Along with other valuable services, ecosystems provide life support functions
essential to human survival for which no substitutes exist. Both the extraction of
ecosystem structure for economic production and the emissions of waste (known together
as throughput) degrade ecosystem services. Long before the threshold of collapse, the
diminishing marginal benefits of increasing economic output are likely to fall below the
rising marginal costs of ecological degradation, at which point continued economic
growth—defined as a “quantitative increase in…the rate of flow of matter and energy
through the economy…and the stock of human bodies and artifacts”—becomes
uneconomic. Economic development—a “qualitative improvement in non-physical
characteristics” (Daly 1991), however, remains possible. A sustainable economy cannot
extract renewable natural resources faster than they can regenerate, extract nonrenewable resources faster than we can develop renewable substitutes, or spew waste
emissions into the atmosphere faster than they can be absorbed. This position became
known as strong sustainability. In Daly’s view, \the sustainable use and just distribution
of resources took precedence over their efficient (wealth maximizing) allocation.
Such claims of limits to growth were met with great skepticism, particularly by
conventional economists who branded their proponents as doomsdayers. Those skeptical
of limits became known as cornucopians. From the perspective of the cornucopians, the
doomsdayers ignored the capacity of human innovation in general and the free market in
particular to adapt to scarcity. As resources become scarce, their prices increase,
providing a market incentive to develop substitutes. Relative scarcity might exist, but not
absolute scarcity (Beckerman 1974). Almost 200 years earlier Malthus had predicted that
geometric increases in human population must eventually outstrip linear increases in food
production, leading to wide spread starvation (Malthus 1798). Instead, by the time of the
Meadows report, humanity was producing more food per capita than at any other time in
history, and productivity was continuing to rise. Stanley Jevons, a 19th century English
economist warned that society must inevitably run out of coal, and that “we must not
dwell in such a fool's paradise as to imagine we can do without coal what we do with it”
(Jevons 1865). Both Malthus and Jevons had been proven wrong. In the words of Nobel
laureate Robert Solow, "If it is very easy to substitute other factors for natural resources,
then there is, in principle, no problem. The world can, in effect, get along without natural
resources" (Solow 1974). We can adapt to scarcity simply by dematerializing the
economy (see Lawn 2001 for a discussion and critique). Human ingenuity, the ultimate
resource, would solve all problems (Simon 1996). The position that human made capital
could substitute for natural capital became known as weak sustainability (Neumayer
2003).
In spite of the cornucopians optimism, however, wealthier societies made major
investments in environmental protection and as a result, many measures of environmental
quality began to improve, some dramatically. The doomsdayers claimed that society had
acted appropriately on their recommendations. The cornucopians in contrast claimed that
these outcomes were to be expected anyway. Economic growth in fact was not the cause
of the problems the doomsdayers presented, but rather the solution. It was an empirical
trend that as societies became richer, birth rates declined, so that economic growth was
the solution to the population problem. A rising tide lifted all boats, and in the presence
of widespread poverty, growth is a moral imperative. In addition, pollution emissions
formed an upside down parabola when plotted against per capita GNP—poor countries
had clean environments, but as they began industrializing, pollution levels increased.
However, as countries got rich enough, their citizens began to demand clean
environments, a luxury good (IBRD 1992; Grossman and Krueger 1993). A number of
recent books by cornucopians argue that almost all environmental indicators are
improving, that resource abundance continues to grow, and that limits to growth theorists
have again been proven wrong (Beckerman 1995; Easterbrook 1996; Lomborg 2001).
In recent years, the concerns of the doomsdayers have increased significantly—
they argue that improvements are illusory, wealthy nations have simply exported their
most environmentally damaging industries to poorer nations, and even if pollution levels
taper off with growth, pollution will increase for decades to come (Arrow K., Bolin B. et
al. 1996; Rothman 1998). Population growth is slowing, but is expected to stabilize at
much higher levels than the planet can sustain. Increasing consumption to slow
population growth is counterproductive. Climate change has many convinced that
planetary waste absorption capacity is the greatest constraint on growth, and some that
we are already doomed to a catastrophically warmer planet (Flannery 2005; IPCC 2007;
Pearce 2007). Diminishing fossil fuel stocks and rising prices have convinced others that
we have reached peak oil, the point at which increasing rates of use overwhelm declining
rates of discovery then begin a steady decline, threatening chaos in a system built on
cheap energy (Deffeyes 2003; Heinberg 2003; Simmons 2005) Hall. A third group is
concerned with renewable resource depletion and biodiversity loss, resulting in the
collapse of ecological life support functions (Balmford and Bond 2005; Hooper, Chapin
et al. 2005; Millennium Ecosystem Assessment 2005). Yet others believe that water
shortages are the greatest threat, or population growth, or toxic wastes. Many believe that
we are exceeding all of Daly’s tenets for sustainability, overwhelming sources, sinks and
services simultaneously (Catton 1980; Tainter 1990; Wackernagel, Schulz et al. 2002;
Wilson 2002; Diamond 2005). Such systems thinkers believe we are well into overshoot,
currently living off natural capital rather than its yield. They also recognize that we are
dealing with complex dynamically adaptive systems, in which precise prediction is
essentially impossible. This is the position taken by the report Limits to Growth: the 30
year update (Meadows, Randers et al. 2004).
Topping off the doomsdayer’s woes, distribution has become a major concern.
Limits to Growth appeared at the end of a 45 year decline in both poverty rates and
income inequality which, with the exception of a brief interval in the 1990s, have
climbed steadily since (Piketty and Saez 2006; US Census Bureau 2007). Similar trends
occur at the global level. In absolute terms, the wealthiest nations have amassed far
more additional wealth than the poorest—1% of GDP in the US equals the GDP of the
worlds 24 poorest nations (Daly and Farley 2004). In relative terms, China, India and a
few other outliers appear to have grown faster than the wealthy nations, but have
simultaneously experienced unprecedented increases in domestic income inequality
(UNDP 2005). Experiments with green accounting in China have shown that ecological
damage and resource depletion accounts for up to 1/3 of GNP in some regions (Qiu
2007). Real incomes in the Sub-Saharan Africa, the world’s poorest countries, and the
incomes of the poorest in Latin America have actually declined (Stiglitz 2002). To make
matters worse, the environmental costs of growth, such as climate change, are likely to
fall disproportionately on the poor (IPCC 2007). Growth has done little if anything to
alleviate absolute poverty while exacerbating relative poverty.
Conventional economists nonetheless continue to play the role of optimists, their
models frequently suggesting that the potential future costs of climate change, heavily
discounted, are less than the current costs of mitigation, and little should be done. The
recent Stern Review on the economics of climate change is considered quite pessimistic
and a call for action, but in reality it estimates that even if we do nothing about climate
change, the economy will double or triple in size by 2050 (Stern, Peters et al. 2006)—the
report’s conclusion that we should act to mitigate change is asking that supposedly poorer
generations sacrifice for richer ones . The extreme of this cornucopian vision is
presented by 2005 Nobel laureate Schelling and other economists who suggest that
climate change will matter little, as it primarily affects agriculture, which is only a small
percentage of GNP (Schelling 2007). Measured in dollars, any consumer good is
apparently a perfect substitute for food.
In a recent twist however, the opponents to economic growth are becoming the
neo-cornucopians, arguing that we already have more than enough. Additional income
fails to make us happier, while working harder to attain it fills our lives with stress
(Schorr 1991; Lane 2000; Diener and Biswas-Diener 2002; Layard 2005). Humans
wants and needs are satiable (Gowdy 1998) and beyond a threshold long passed in the
wealthy countries, increasing consumption makes us worse off (Max-Neef 1995). Having
satisfied our basic needs, it is primarily relative wealth that makes us better off (McBride
2001) and increasing wealth for all helps no one. . In addition to physical limits to
growth, we have reached psychological limits (Maiteny 2000), so continued economic
growth is undesirable as well as impossible. The horn of plenty is over-flowing. As
scientists have reached near consensus on the danger of climate change (IPCC 2007),
even some cornucopians and conventional economists are recognizing the need to act
(Cline 1992; Easterbrook 2006), and those that don’t may soon fade into irrelevance.
In conclusion, arguments in the growth debate range from inevitable doom no
matter what we do, through strong then weak sustainability, to inevitable sustainability as
long as we trust in the market. In our complex ecological-economic system with
uncertain facts and a sample size of one, absolute proof for any position is impossible—
uncertainty cannot be eliminated, and the past is a poor guide to the future (Faber, Proops
et al. 1998; Farley, Erickson et al. 2005; Folke 2006). The decision whether to act on
predictions of the doomsdayers or cornucopians must therefore be weighted by ethical
attitudes towards future generations and towards risk. The worst case scenario is acting
on the beliefs of the cornucopians when the doomsdayers are actually correct. In
contrast, if we act on the beliefs of the doomsdayers and limit throughput, if the
cornucopians are correct market forces will improve efficiency and provide substitutes,
and no harm is done (Costanza 1999; Costanza 2000). If the neo-cornucopians are
correct, the costs of addressing environmental problems are negligible or negative, so
even if the chances of catastrophe are vanishingly small, we should act.
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