The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg. New Society Publishers 2011.
Since World War II, economic thought has been dominated by Keynesian theory, developed by John Maynard Keynes, and neoliberal theory as espoused by Milton Friedman and others. Thatcher and Reagan both relied on advice from neoliberals and a nearly worldwide embrace of Friedman’s recommendations led predictably to increased inequality between the rich and the poor, and more frequent and severe economic bubbles and crashes.
Neoliberals believe that economic growth can best be promoted through a laissez-faire, government butt-out approach that assumes that the market always knows best. Keynesians believe economic growth is best achieved through appropriate government intervention as necessary. But both approaches share in common the belief that a sound economy is based on continuous, never-ending growth.
Growth ceased in the financial crash of 2008 that hit many nations. This is problematic for neoliberal thought, as the bank deregulation that neoliberals promote was central to the implosion of the financial system. However, government intervention in the form of stimulus packages and bail-outs has failed to return the economy to business-as-usual, confounding Keynesian theory.
In fact, the economy can perhaps be described as treading water, going nowhere fast. In newscasts, economic recovery is still being described as “fragile”.
Heinberg argues that the failure of the economy to rebound reflects a more fundamental problem than just the misdeeds associated with the 2008 crash. It is a reflection of the limits to growth.
It seems pretty obvious that, given a planet with a finite set of resources and space, infinite growth is simply not possible, yet there is a great deal of resistance to the reality of limits to growth. Here in Canada, the government invests taxpayer dollars in television campaigns that assure us all they are working hard on economic growth and all is well!
Oil is an obvious problem for continued growth. Peak oil doesn’t mean that there is no more oil, but that production is no longer increasing. The easiest to find, cheapest to produce oil has been used up. The United States uses more than 18,000,000 barrels of crude oil a day. It produces about half of that domestically, with recent increases in production resulting from new technologies for shale extraction. The rest, some 9 million barrels a day, is imported. Prime Minister Harper likes to promote Canada as a big producer, but the U.S. imports less than 3 million barrels a day from the Alberta tar sands. Even with major increases in tar sands production, that leaves a significant shortfall. The rest comes from sources around the globe.
But it’s not just oil that is peaking. It’s just about everything. World grain stocks, for example, peaked in 1986. Agriculture has become the single biggest source of impact on the planet, connected to soil salination (through irrigation), deforestation, loss of habitat and biodiversity, fresh water scarcity, pesticide proliferation, pollution of water and soil. Fertilizer use world wide increased 500% from 1960 to 2000, resulting in dead zones in the oceans from fertilizer runoff into rivers. Peak phosphorus production was reached in 1989. Does peak phosphorous mean peak food?
If economic growth requires further stimulus from governments, where will the money come from? Many countries and states are already on the brink of bankruptcy.
Heinberg provides a primer on economic theory and the status of continued growth as a viable reality. He considers arguments that rely on innovation, substitution and efficiency to keep the economy growing and finds them lacking. He looks at important issues such as the state of the rising Chinese economy, population stress and income inequity. Finally, Heinberg looks at the alternative to growth, a steady-state economy, and examines options beyond our current status quo. Many interesting projects such as Transition Towns and the Natural Step eco-municipality movement are already underway. Will it be too little, too late?
The End of Growth offers readers many interesting ideas and insights to ponder and is highly recommended. Richard Heinberg is a Fellow of the Post Carbon Institute. Don’t have time to read the book? There are a number of short videos available for viewing on Youtube featuring Richard Heinberg and/or the Post Carbon Institute. Here is a short, entertaining history of economic growth and where we are heading.