What economists don’t know about physical limits to growth could kill us
“Only by taking the crash scenario seriously can we take concrete actions to avoid it”, says physicist Tom Murphy in his article, referenced below, Discovering Limits to Growth
No 1332 Posted by fw, May 12, 2015
Here’s what prompted this post. Yesterday, rabble.ca published an article titled, Striking a balance between economic development and environment by Marvin Shaffer, an adjunct professor at Simon Fraser University. According to his bio: “Marvin has managed his own consulting firm specializing in energy, transportation and natural resource economics for over thirty years.”
Given the article’s title, I was disappointed to read little more than generalities about economic development and environment, including these two: “There are some who suggest that there is no conflict — there can be jobs and environmental policies effectively prohibiting certain types of developments. No doubt there can…” And “The objective isn’t more growth; rather it should be better, more beneficial growth.” Not particularly helpful for rabble readers, or, for that matter, governmental policy makers.
In stark contrast, physicist Tom Murphy in his article, Can Economic Growth Last? applies physical analysis “to argue that sustained economic growth in the long term is fantastical.”
I confess, Tom’s math, replete with graphs and physics concepts, is beyond my comprehension. But I had no problem grasping his concluding paragraphs, which I have reposted below. Bottom line, Tom concludes:
“There are well-developed steady-state economic models, pioneered by Herman Daly and others. There are even stepwise plans to transition our economy into a steady-state. But not one of those steps will be taken if people (who elect politicians) do not crave this result. The only way people will crave this result is if they understand (or experience) the impossibility of continued growth and the consequences of not acting soon enough. I hope we can collectively be smart enough to make this transition.”
To read Murphy’s original, challenging article, click on the following linked title. Alternatively, his readily comprehensible closing paragraphs are reposted below,
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Can Economic Growth Last? By Tom Murphy, Do the Math, July 14, 2011
Where Does this Leave Us?
I have used physical analysis to argue that sustained economic growth in the long term is fantastical. Maybe for some, this is stating the obvious. After all, Adam Smith imagined a 200-year phase of economic growth followed by a steady state. But our mentality is currently centered on growth. Our economic systems rely on growth for investment, loans, and interest to make any sense. If we don’t deliberately put ourselves onto a steady state trajectory, we risk a complete and unchoreographed collapse of our economic institutions.
Admittedly, the argument that economic growth will stop is not as direct a result of physics as is the argument that physical growth will stop, and as such represents a stretch outside my usual comfort zone. But besides physical limits, I think we must also apply notions of common sense and human psychology. The artificial world that must be envisioned to keep economic growth alive in the face of physical limits strikes me as preposterous and untenable. It would be an existence far removed from demonstrated modes of human economic activity. Not everyone would want to participate in this whimsical society, preferring instead to spend their puffy paychecks on constrained physical goods and energy (which is now dirt cheap, by the way, so a few individuals could easily afford to own all of it!).
Recognizing the need to ultimately transition to a non-growth economy, I am personally disconcerted by the fact that we lack a tested economic system based on steady-state conditions. I would like to take a conservative, low-risk approach to the future and smartly place ourselves on a sustainable trajectory. There are well-developed steady-state economic models, pioneered by Herman Daly and others. There are even stepwise plans to transition our economy into a steady-state.
But not one of those steps will be taken if people (who elect politicians) do not crave this result. The only way people will crave this result is if they understand (or experience) the impossibility of continued growth and the consequences of not acting soon enough. I hope we can collectively be smart enough to make this transition.
Dr. Tom Murphy
Tom Murphy is an associate professor of physics at the University of California, San Diego. Murphy’s keen interest in energy topics began with his teaching a course on energy and the environment for non-science majors at UCSD. Motivated by the unprecedented challenges we face, he has applied his instrumentation skills to exploring alternative energy and associated measurement schemes. Following his natural instincts to educate, Murphy is eager to get people thinking about the quantitatively convincing case that our pursuit of an ever-bigger scale of life faces gigantic challenges and carries significant risks.
SEE ALSO
- Discovering Limits to Growth, by Tom Murphy, Do the Math, September 7, 2011 – Murphy begins, “I thought it was high time that I read the classic book The Limits to Growth describing the 1972 world computer model by MIT researchers Meadows, Meadows, Randers, and Behrens. I am deeply impressed by the work, and I am compelled to share the most salient features in this post.”
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