Is Economic Growth Ever Sustainable?

One can argue that economic growth is so ingrained in our culture that it, not Christianity, is the national religion of the U.S. We expect it, we plan for it, we demand it, and we cannot imagine how a society can function without it.

For 150 years, during the golden age of cheap fossil fuels, it certainly has seemed that way. We’re about to confront a whole new reality, however, and it’s appropriate for us to ask whether there is any way an economy can sustain constant growth indefinitely. It also helps to remember the relatively brief history of economic growth.

To help us get our brains around it, imagine an economy consisting of three and only three people, a butcher, a baker, and a candlestick maker living happily on 15 acres of lush, productive land. Now imagine that all any of the three needs is produced by one of the three. The butcher raises his own livestock; the baker grows her own wheat, yeast, and other ingredients; and the candlestick maker produces his own beeswax and wicks.

Each citizen in our three-citizen economy uses a portion of what he or she produces and trades it to the other two for some of what they produce. Each has five acres of property on which he or she can grow crops, raise animals, and carry out manufacturing.

This system works fine at first. The butcher may need to rent some land from the candlestick maker because his livestock need more crops for food, but they probably can make it work. But think what happens when all three begin to grow. Let’s keep it manageable, say 5% per year. Every year, the baker needs to sell 5% more bread, or persuade her neighbors to pay her higher prices for the same products. Ditto the candlestick maker. And every year the butcher needs to produce 5% more beef, pork, and poultry.

It may actually work for a year or two. Maybe we can squeeze a little more efficiency out of the baker’s wheat field and use some sexy growth hormone to enhance the growth of the butcher’s chickens. But what happens after 20 years, by which 5% growth means all three need to be producing 150% more than they were at the beginning? Or after 50 years, when everybody needs to be producing 10 times as much? And on the same 15 acres! It won’t happen. And notice, if you will, that we have kept the population of our three-person economy stable. If our three citizens have more children than are necessary to replace themselves, they will simply make a bad problem worse.

But wait. They can hire more staff, add more plant capacity, and go acquire more land, can’t they? Yes they can, but only to a point. Our three exemplary business operators can expand if more land and fresh water are available. But when you ask the economy of the world to keep expanding, it runs into limits very quickly. We don’t have any more worlds standing by waiting for us to make them an offer. We have one planet, with a finite amount of land area, a finite amount of fresh water, and a finite amount of breathable air.

“The economy is a wholly owned subsidiary of the environment, not the other way around.” — Gaylord Nelson

To assume that the economy of the world can keep growing is to assume that there will always be more resources, that we can go make more land, and that we can always find more of every resource we need. And that is exactly the assumption we humans have made for the last 150 years.

And can you blame us? Cheap and abundant fossil fuels have created a “technology can solve all problems” ethic that refuses to recognize limits. Need to be in Bangkok tonight? No problem. Go online, purchase the ticket, grab your toothbrush, and go. Need to build a 20-story building in 12 months? Plot out the critical path, line up your subcontractors, and hey, we may deliver it in 10 ½. Need to move the London bridge to Arizona? Can do. Number the stones, ship them 10,000 miles to California, truck them to Lake Havasu, Arizona, and reassemble the bridge. While you’re doing it, try to ignore the derisive giggles of the people watching you engage in this goofiness.

We in the industrialized world are so steeped in this “we can do it” spirit that it informs our sense of what it is to be human. Anyone who dares to say this can’t continue is weak, unimaginative, and deserving of scorn. Even as you read this, you are conditioned to pity us because we’re so small-minded as to be unaware of the limitless potential of the human imagination.

All we ask is that you use that limitless imagination of yours to do the math. It almost doesn’t matter what activity. Find the amount of it we’re doing now, plan for it to grow at a reasonable compounded rate for one or two hundred years, and see where you are when you finish. You may find yourself recognizing some limits too.

Now, let’s say we’ve managed to bring you around to understanding that economic growth will stop at some point but that you are confident that point is way out in the distant future. Now you’re ready to think about the effect the Triple Threat will have on economic growth, probably within a decade or two. Before you do, though, stop and drink a glass of wine or at least take a deep breath. This next part is not at all pleasant.

Ready to read What the Triple Threat Will Mean for Economic Growth?