Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, James Magnus-Johnston, and Eric Zencey. Guest authors by invitation.

Where is Pope Francis on Economic Growth?

by David Kane

Maryknoll Center for Global Concerns, Washington DC Oct. 27, 2008 © Rick Reinhard 2008

Those who believe that there is a fundamental conflict between economic growth and environmental protection will find Pope Francis’ recent encyclical, Laudato Si (Praised Be), a welcome addition to the literature; as well as an important tool in helping others, especially Catholics, to understand and accept the limitations of economic growth. Pope Francis explains how the environmental and social crises we are experiencing will require “profound changes in lifestyles, models of production and consumption, and the established structures of power which today govern societies.” Few in the world have as large a reach as the pope, so it is encouraging to hear him speaking so clearly on these crucial issues.

Environmental and Social Crises

Pope Francis begins by describing the many ecological crises ravaging the planet today. While the media have focused almost exclusively on his inclusion of climate change, referring to it as the climate encyclical,” he actually discusses a host of other ecological crises as well, from the loss of biodiversity and forests, to water and air pollution.

The earth, our home is beginning to look more and more like an immense pile of filth.

He then delves into a number of social crises, including inequality, societal breakdown, and declining quality of life, directly relating them to the ecological crises.

Human beings too are creatures of this world, enjoying a right to life and happiness, and endowed with unique dignity. So we cannot fail to consider the effects on people’s lives of environmental deterioration, current models of development and the throwaway culture.

The human environment and the natural environment deteriorate together; we cannot adequately combat environmental degradation unless we attend to causes related to human and social degradation. In fact, the deterioration of the environment and of society affects the most vulnerable people on the planet.

Causes

Technocratic paradigm

Francis.presidencia.gov.ar

Photo Credit: presidencia.gov.ar

The pope suggests some fundamental causes of these crises including a very interesting discussion around technology. While some have accused Pope Francis of being against, or at least afraid of, technology, that is far from the truth.

Technology has remedied countless evils which used to harm and limit human beings. How can we not feel gratitude and appreciation for this progress, especially in the fields of medicine, engineering and communications?

The problem for Pope Francis is not technology per se, but “the way that humanity has taken up technology and its development according to an undifferentiated and one-dimensional paradigm.”

Men and women have constantly intervened in nature, but for a long time this meant being in tune with and respecting the possibilities offered by the things themselves. It was a matter of receiving what nature itself allowed, as if from its own hand. Now, by contrast, we are the ones to lay our hands on things, attempting to extract everything possible from them… [h]uman beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. It is based on the lie that there is an infinite supply of the earth’s goods, and this leads to the planet having every last drop and more squeezed out of it.

In a thoughtful conversation around this technocratic paradigm and its effects, Pope Francis laments how this paradigm tends to dominate economics and political life, degrade the environment, benefit small sectors of society, magnify humanity’s effects on Earth, and create overspecialization, obfuscating the bigger picture.

Culture of relativism

A culture of relativism in which “human beings set themselves at the centre [and] give absolute priority to immediate convenience and all else becomes relative” is another root cause of our crises, according to Pope Francis.

 [The culture of relativism] is also the mindset of those who say: Let us allow the invisible forces of the market to regulate the economy, and consider their impact on society and nature as collateral damage.

This same ‘use and throw away’ logic generates so much waste, because of the disordered desire to consume more than what is really necessary.

Growth and consumption

Another fundamental cause of today’s crises proffered by Pope Francis is the almost exclusive focus on economic growth and ever-increasing consumption as solutions to social problems.

Social exclusion, an inequitable distribution and consumption of energy and other services, social breakdown, increased violence and a rise in new forms of social aggression, drug trafficking, growing drug use by young people, and the loss of identity. These are signs that the growth of the past two centuries has not always led to an integral development and an improvement in the quality of life. Some of these signs are also symptomatic of real social decline, the silent rupture of the bonds of integration and social cohesion.

Since the market tends to promote extreme consumerism in an effort to sell its products, people can easily get caught up in a whirlwind of needless buying and spending. Compulsive consumerism is one example of how the techno-economic paradigm affects individuals…That paradigm leads people to believe that they are free as long as they have the supposed freedom to consume. But those really free are the minority who wield economic and financial power.

Solutions

If we acknowledge the value and the fragility of nature and, at the same time, our God-given abilities, we can finally leave behind the modern myth of unlimited material progress. A fragile world, entrusted by God to human care, challenges us to devise intelligent ways of directing, developing and limiting our power.

On an individual level, Pope Francis speaks of the importance of people experiencing an “ecological conversion” in which they develop a deepened appreciation and love for life in all its forms: “a loving awareness that we are not disconnected from the rest of creatures, but joined in a splendid universal communion.” It becomes clear to them that “nature cannot be regarded as something separate from ourselves or as a mere setting in which we live. We are part of nature, included in it and thus in constant interaction with it.”

Fortified by this conversion, people become more active in their communities usually through one of the “countless array of organizations which work to promote the common good and to defend the environment, whether natural or urban.” Actively engaged citizens are more likely to become environmental educators at their school, in their family, at church, and elsewhere. This education includes “a critique of the ‘myths’ of a modernity grounded in a utilitarian mindset (individualism, unlimited progress, competition, consumerism, the market without rules)…and helping people, through effective pedagogy, to grow in solidarity, responsibility and compassionate care.”

On a societal level, Pope Francis lays out some principles to guide our actions into the future. He says that for too long, political decisions have been made based on outdated economic ideologies and by specialized technicians seemingly incapable of seeing the bigger picture.

Politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy.

Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life.

Another of Pope Francis’ guiding principles is the need for more long-term thinking. He believes that politics and business have been dominated by short-term thinking for too long, making important changes difficult. He speaks often of intergenerational solidarity and the need to consider future generations in our decisions today.

The myopia of power politics delays the inclusion of a farsighted environmental agenda within the overall agenda of governments.

Caring for ecosystems demands farsightedness, since no one looking for quick and easy profit is truly interested in their preservation.

Pope Francis says that it is wrong to believe that market-based solutions are always the best solutions.

Environmental protection cannot be assured solely on the basis of financial calculations of costs and benefits. The environment is one of those goods that cannot be adequately safeguarded or promoted by market forces.

We need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations?

As an alternative to market-based solutions, Francis suggests treating the climate and other important aspects of nature as common goods (a term he repeats twenty times throughout the document). Nobel economist Elinor Ostrom has documented hundreds of examples of communities organizing their resources as commons. For this to work, another important principle that Pope Francis stresses throughout Laudato Si is the need for subsidiarity—that people affected by decisions should be involved in making those decisions. Too much environmental and social destruction has been caused by decisions being made by people thousands of miles away who will never live with the results of those decisions.

Laudato Si is an important document written at an important time in the history of the cosmos. With the vast reach of the papacy, I hope it and Pope Francis’ exhortations will serve as a wake up call for many and a manual for change for those dedicated to changing the world. He is clear that it is important that we act now.

The pace of consumption, waste and environmental change has so stretched the planet’s capacity that our contemporary lifestyle, unsustainable as it is, can only precipitate catastrophes, such as those which even now periodically occur in different areas of the world. The effects of the present imbalance can only be reduced by our decisive action, here and now. We need to reflect on our accountability before those who will have to endure their dire consequences.

 


 

David Kane (João Pessoa, Brazil) is a researcher for the Faith-Economy-Ecology project of the Maryknoll Office for Global Concerns (MOGC). As a Maryknoll lay missioner from 1995 to 2012, he served in Brazil working with recyclers in city dumps and with the Jubilee Brazil campaign, as well as in Washington, D.C. Dave helped found Faith, Economy, Ecology, Transformation, a group of mostly faith-based organizations and individuals inspired to assist in the transition to a more sustainable and equitable economy. Currently, Dave educates and advocates for economic justice, particularly around trade, Latin America, and ecological economics. (David Kane photo credit: Rick Reinhard)

 

A Sustainable True-Cost Economy Promises an Escape from Massive Water Pollution

by Brent Blackwelder

Brent Blackwelder

A year ago, I wrote about how a true-cost steady state economy would deal with water pollution. Last August, the alarming green slime at the west end of Lake Erie was so bad that it shut down Toledo’s water supply for half a million people. Who would pay the tremendous damages caused by the green slime? Certainly not the industrial agricultural interests who were responsible for about two-thirds of the problem!

Our current U.S. economy routinely lets polluters off the hook and even rewards them with subsidies, and the same is generally true for the global economy. During the past twelve months, water pollution has gone from bad to worse as exploding rail freight trains loaded with tar sands oil have caught on fire, causing derailments and spilling contaminants into rivers.

Many people are under the mistaken impression that violations of the Clean Water Act are rare. The Potomac Riverkeeper Network has just completed an analysis of water pollution violators in a section of the Potomac River Basin. (full report forthcoming; for background, see the Potomac Riverkeeper Network’s Upper Potomac River Basin campaigns.) Basin wide, there are over 2000 facilities with permits to discharge pollutants into the Potomac River. Of the 293 facilities in the Upper Potomac region, more than 10% had violated their permit conditions during the last three years! Just think of the increased enforcement costs if a region jumps from 5% to 10% non-compliance. The enforcement workload doubles!

Reports from the Pacific coast, from California to Alaska, are disturbing because they indicate that some fisheries and shell fisheries may be on the tipping point of collapse. Worldwide, we are seeing industrial civilization screw up clean water through nutrient loading from gigantic crop monocultures and animal factory slums. It’s a recipe for catastrophe. Several dead zones at the mouths of great rivers like the Mississippi have gained notoriety, but the public is not aware that there are now hundreds of such zones worldwide.

Animas River.Schatzl and Pickles

The Animas River before the toxic metals of the Gold King Mine spill turned it bright orange. Photo Credit: Schatzl and Pickles.

The latest water pollution debacle occurred just this month (August 2015) in the Colorado Rockies. A state of emergency was declared as the Animas River turned orange when millions of gallons of toxic heavy metals and carcinogens from the Gold King Mine spilled and created a hazardous mess at the very peak of summer recreation.

Recreation in this part of Colorado is a crucial component of the economy. One river outfitter has had to lay off over twenty employees. Agencies have allowed the leakage at gold mines like the Gold King Mine to persist for years without being cleaned up.

These accidents would be far less likely to occur in a sustainable steady state economy. A steady state economy would not incentivize pollution. It would not allow externalization of pollution and health costs, and it would eliminate subsidies for extraction of hardrock minerals and fossil fuels. Globally, an estimated $600 billion per year in subsidies is provided annually to the fossil fuels industry, in contrast to $100 billion for wind, solar, and other renewable energies.

A sustainable economy would place genuine value on the many benefits provided by clean water and free flowing rivers, including diverse fisheries, a variety of recreation activities, beautiful scenery, and a healthy water supply. The global economy looks upon water more as a commodity, and trade agreements attempt to facilitate the privatization of water. A sustainable true-cost economy, on the other hand, does not externalize pollution impacts or exclude from economic calculation the numerous but less tangible benefits obtained from free-flowing rivers.

A sustainable true-cost economy holds so much promise, but the immense challenge of transitioning to such an economy can seem daunting. Tackling our water pollution crisis illuminates some highly actionable steps we could take immediately to start making a steady state economy a reality.

The Securities and Exchange Commission (SEC) could take an initial step toward a true-cost economy by requiring the many companies reporting to it to disclose their pollution impacts (externalities). Impossible you say? A few years ago it seemed impossible to get the SEC to require disclosure of CEO salaries. But guess what? It just happened—thanks to leadership by Senator Elizabeth Warren (D-Mass) along with tremendous grassroots pressure.

The SEC will now require publicly-owned corporations to disclose how much their CEOs make compared with the median wage of their workers. The Washington Post reported that the pay gap between executives and unskilled workers is about 300 to 1, not 30 to 1 as most Americans think. This precedent-setting action by the SEC should be followed by other campaigns directed at the SEC, starting with action on externalities.

In a true-cost economy, the price tag for goods and services that cause serious damage to life support systems would be so high that such products would not be produced. We would do well to recall that there is no economy on a dead planet. Critics who say that civilizations are nowhere close to causing ecosystem collapses do not consider the scientific evidence on planetary boundaries, nor the lessons from past collapses of societies. I think we should seize on the outrage over all the water pollution disasters in 2014 and 2015 and push for new economic structures that will provide long-term solutions.

First Cut: No Five-Kid Presidents

By Brian Czech

(With apologies to the Octomom, who didn’t ask for this kind of attention.)

Brian CzechMention the Octomom, and the first thing that comes to mind is that ridiculous fecundity. If she tried running for President, she’d never make it to the first debate, because everyone would take the 14-kid factoid (yes, she had 6 before the 8) to indicate some type of extremist propensity. More astute analysts would also point out that, as an example for the nation, the Octomom would be a demographic disaster of unparalleled proportions.

Anybody for the second coming of Easter Island?

If everyone bred like the Octomom, the population would double every 11 years!* In less than 50 years, then, the population would be 16 times the current bloated level. And you think your ride to work is congested now? The only good thing about it—regarding congestion at least—is that the vast majority of those offspring wouldn’t be driving to work in the first place. In a country unable to provide full employment now, imagine it trying to provide twice as many jobs, not to mention 4 times as many, then 8 times, etc. And with no more water, soil, and frackable Dakotas than it already has!

Donald_Trump_by_Gage_Skidmore_2

Five-kid presidential candidate, Donald Trump. Image Credit: Gage Skidmore

So much for Octomom. If she ever had any presidential timber, it was clearcut with the parturition of that last round of 8. For that matter, wasn’t the original 6 (by the age of 28) already a patently poor precedent for a presidential candidate? She still would have been leading the way for a doubling time of 14 years.*

The fact is, no matter what you think about limits to growth, a population growth rate way—way—over the replacement rate is as sustainable as a shrimp at the local Red Lobster. Who wants to vote for an example setter for shrimp-like sustainability?

I don’t know about you, but I wouldn’t vote for a candidate with any more than 3 kids, and 2 or 1 would be much better. By all accounts, the nation is not yet with me on that. But as a polity, where do we draw the line? Should we—or any country—have a president who is five-eighths of the way to Octo-fecundity?

Well, we have one candidate who has proven precisely that fecund. Shockingly enough, a couple of them are even more so.

Drumroll, please, amidst the falling presidential timber…

Name Kids Analysis
Rick Santorum 7 What the hell? “Champion Breeder for President!”
Jim Webb 6 You got your Octomoms and you got your Sextodads.
Donald Trump 5 Donald Trump, you’re… you know what!
Chris Christie 4 Too much congestion on those bridges already.
Martin O’Malley 4 One to each cardinal direction.
George Pataki 4 Does it really matter?
Marco Rubio 4 Doubling time, 22 years.
Lincoln Chafee 3 May Rhode Island not Easter Island become.
Ben Carson 3 Sing along, “And it’s once… twice… three times, irrelevant.”
Mike Huckabee 3 Presumably a relatively holy trinity.
Bobby Jindal 3 Politically correct enough, again!
Jeb Bush 3 They’re also running for president.
Rand Paul 3 Triple threat to the Federal Reserve!
Ted Cruz 2 One for machine guns and one for bacon.
Carly Fiorina 2 Executive competency.
John Kasich 2 Although one of them can’t recall who Kasich is.
Rick Perry 2 Although Perry can’t recall who one of them is.
Scott Walker 2 He lets them eat cake.
Hilary Clinton 1 Not for lack of effort on Bill’s part.
Bernie Sanders 1 Demographic socialism.
Lindsey Graham 0 Whatever.

 

So there you have it. Vote with your heart and your mind. And with demographic diligence.

 


Notes:

* The population dynamics practiced here are suitable for rough estimates. Doubling times were calculated using a Population Growth Rate Calculator with the reproductive history of the Octomom as summarized at Wikipedia. The primary variable not accounted for in these doubling time estimates is deaths. However, the USA is characterized by high survival rates and relatively long life spans (e.g., the Octomom is 40 years old and each of her children is alive).

 

Would the Steady-State Economy Be a Miracle?

By Herman Daly

Herman DalyMany people think that advocating a steady-state economy is like wishing for a miracle. I understand their reasoning and take their point—in the present era of growthism it does seem rather like advocating a miracle. But that raises the question: exactly what is a miracle? And how many other miracles are we wishing for these days? Of course science, by definition of its method, rules out the existence of miracles, if by miracle we mean either something not explainable physically in terms of efficient causation, or else overwhelmingly improbable. Consequently, if a miracle did exist science could not see it. Looking for a miracle with science is like looking for darkness in the narrow beam of a flashlight.

Consciousness, reason, and good and evil are undeniably real, yet we have no convincing explanation for them in terms of efficient causation or biophysical evolution. And the origin of first life (as opposed to its subsequent evolution into different forms) also qualifies as a miracle by the above definition. Sir Francis Crick, co-discoverer of DNA, thinks the origin of life on earth is so physically improbable (miraculous) that it must have arrived here from space—”directed panspermia” is the elegant name for this miraculous sidereal ejaculation. Science considers the whole amazing experience of life on earth as just a cosmic accident.

Given that life on earth is, according to science, eventually going to end, why make extraordinary efforts to prolong it, especially if, as the modern intelligentsia assures us, the universe and all life are just temporary accidents? We, as non-miraculous random events, can have no objective idea of what a good life is. Therefore we cannot know how much per capita consumption is sufficient for a good life. Instead of a steady-state economy the default economic rule of scientific materialism seems to be, “more and more (especially for me) while things last.” Yes, I know that most scientific materialists are good people, but I am suggesting that their goodness must have origins other than their professed materialism.

For some of us materialism is just a methodology, not an ultimate worldview in which divine purpose might replace cosmic random. For Christians, for example, hope in the promise of New Creation (Rom. 8; 1 Cor.15) substitutes for despair over the ultimate impossibility of preserving this Creation forever, as well as over our repeated failures to protect it while it lasts. Like this Creation, New Creation would be a miracle—a generalized resurrection of this mortal Creation.It is a grace-based hope that flies in the face of the hard facts of evil, entropy, and finitude. It is a religious belief that death, decay, and oblivion are not the last words, and therefore it is classed as superstition in the modern secular academy, along with other religions.

Belief that the end of the world will occur soon, with lots of life-support capacity left unused (wasted), is a tenet both of some scientific catastrophists, as well as some religious fundamentalists, who consequently consider themselves exempt from the responsibility of Creation stewardship. Why sacrifice for a non-existent beneficiary, they logically ask? However, Pope Francis, for one, in his Laudato Si strongly affirms the value of this Creation, however transitory, and in this regard he speaks for most Christians and many other religious people, as well as for some thoughtful atheists.

Most scientists (and some theologians) will not be happy with talk about miracles, or with hope in New Creation. They fear that such hope will undercut efforts to prolong the present Creation, which they believe is all there is or ever will be. Yet when faced with the ultimate heat death of the universe, plus the increasing likelihood of self-destruction well before then, and with the meaninglessness implicit (and increasingly explicit) in their materialist cosmology, they sometimes flinch. They look for optimism (if not hope) somewhere within their materialism. They invent the hypothesis of infinitely many (unobservable) universes in which life may outlive our universe.

Monkey-typingThey were led to this extraordinary idea in order to escape the implications of the anthropic principle—which argues that for life to have come about by chance in our single universe would require far too many just-so coincidences among the magnitudes of basic physical constants. To preserve the idea of chance as reasonable cause, and thereby escape any notion of Creator or Telos, they argue that although these coincidences are indeed miraculously improbable in a single universe, they would surely happen if there were infinitely many universes. And of course our universe is obviously the one in which the improbable events all happened. If you don’t believe that Shakespeare wrote Hamlet, you can claim that infinitely many monkeys pecking away at infinitely many typewriters had to hit upon it someday. That such a deification of random would take the meaning and pleasure out of reading Hamlet—or studying anything in “creation” at all—is a carefully repressed thought.

The idea of infinitely many universes, or monkeys for that matter, is speculative—at least as speculative as the idea of New Creation. The only evidence that could be offered to support hope for the future miracle of New Creation would be the occurrence of a similar miracle in the past, namely the present Creation. Science understandably tries to account for this Creation, as far as reasonable, in its own materialistic terms, and of course from the beginning rejects “miracle” or God as an explanatory category. I am not objecting to that self-imposed, defining limitation of science. I am just saying that New Creation is not a scientific concept rooted in efficient and material causation. It is a religious hope rooted in the idea of final causation and ultimate purpose. As such it is neither contradictory to nor dependent upon science.

Whether ad hoc postulation of infinitely many unobservable universes violates the self-imposed limitation of science, and belongs more to the category of miracle, I will leave to the reader’s judgment. But the working hypothesis of scientific materialism, however fruitful it has been, should not be sanctified as the Ultimate Metaphysics of Chance. Nor does adding Darwinian natural selection to Mendelian random mutation alter the picture, since the selecting criteria of environmental conditions (other organisms and geophysical surroundings) are also considered to be a product of chance. Mutations provide random change in the genetic menu from which natural selection picks according to the survival value determined by a randomly changing environment.

Such a Metaphysics of Chance precludes explanation of some basic facts, pushing them into the category of miracle: first, that there is something rather than nothing; second, the just-right physical “coincidences” recognized in the anthropic principle; third, the “spontaneous generation” of first life from inanimate matter (which has apparently never happened again); fourth, the creation of an incredible amount of specified information in the genome of all the irreducibly complex living creatures that evolved from the relatively simple information in the first living thing (in spite of the fact that random change destroys rather than creates information); fifth, the emergence of self-consciousness and rational thought itself (if my thoughts are ultimately the product of random, why believe any of them, including this one?); sixth, the amazing correspondence between abstract mathematical thought and empirical natural order; and sixth, the innate human perception of right and wrong, of good and bad, which would be meaningless in a purely material world. Explaining these facts “by chance” strains credulity at least as much as “by miracle.”

Metaphysical humility remains a virtue for both science and religion. The longevity of a steady-state economy is a metaphysically humble goal appropriate for limited creatures in the face of ignorance and mystery. Christianity and science both recognize the fundamental finitude and frailties of this Creation. Christianity offers ultimate hope in New Creation; science necessarily remains mute about that. Scientism, however, seeing no limits to this Creation, offers, instead of hope, the campaigning optimism of, for example, the Coming Singularity of the digital “new creation” with immortal silicon-based consciousness, or IBM’s new creation of “building a smarter planet,” or NASA’s new creation of colonizing Mars.

A moment’s reflection, however, shows that a spaceship, and a space colony, as well as a population of infinitely long-lived silicon “people,” must all operate as the strictest of steady-state economies. If we cannot manage a steady-state economy on the large and forgiving earth out of which we evolved and to which we are evolutionarily well adapted, then how likely are we to manage it on a barren rock under alien conditions, including extreme cold and intense radiation? Yet large amounts of taxpayer’s money is wasted in pursuit of the unnecessary miracle of colonizing Mars, while nothing is invested in the necessary and smaller miracle of attaining a steady-state economy on our finite earth. The pseudo-religion of scientism leads those who reject a steady-state economy on earth as a “miracle” to imagine even bigger miracles to escape it.

 


Notes:

1. For more on the theology of New Creation, see, Jürgen Moltmann, Ethics of Hope. Minneapolis, MN: Fortress Press. 2012; John Polkinghorne, The God of Hope and the End of the World. New Haven, CT: Yale University Press. 2003; and N. T. Wright, Surprised by Hope. New York: Harper Collins. 2008.

 

What About Innovating Beyond the Growth Trap? A Challenge to the Ecofiscal Commission’s Growth Fixation

By James Magnus-Johnston

James Magnus-JohnstonA new voice has emerged recently in Canada called the “Ecofiscal Commission,” which could have the funding, clout, and determination to steer the country in a more promising direction. The group includes high-profile economists, former political leaders, and high-powered financiers. They define “ecofiscal policy” as something that “corrects market price signals to encourage the economic activities we do want (job creation, investment, and innovation) while reducing those we don’t want (greenhouse gas emissions and the pollution of our land, air, and water).” There seems to be a semblance of steady state thinking among this otherwise rather conventional lot.

Not so fast. The Ecofiscal Commission recently clarified that it “believes that our economies can continue to grow, even as we improve the environment by polluting less and using our natural resources more efficiently.” I found it noteworthy that this group of high-profile individuals decided that it was necessary to address the question of growth. Perhaps that’s because folks like myself don’t believe their policies are sufficient to address 21st century challenges, such as anthropogenic climate change and mass extinction.

One of their commission members, Dr. Dick Lipsey, is a “renowned expert in the field of economics and innovation,” and Professor Emeritus of Simon Fraser’s Department of Economics. In a recent Ecofiscal blog post, he rehearsed a standard narrative of innovation and technological progress that many ecological economists are familiar with. His narrative makes mention of neither the rebound effect nor of exactly what technologies will systematically reduce our material footprint. He even seems to suggest that if we don’t grow the economy, our health outcomes will decline due to a lack of medical innovation.

Locomotive.SMU, Central Univ. Libraries, DeGolyer Library

“It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.” -William Stanley Jevons. Photo Credit: Southern Methodist University, Central University Libraries, DeGolyer Library.

He goes on to write about how “those who, like this commentator, think only of today’s commodities and today’s technologies, do not see the possibilities of raising living standards, while also dealing with pollution, through technological advance.” This seems straightforward enough—we don’t know what we don’t know. New technologies will emerge over time. He then proceeded to make a sweeping claim by listing a number of technologies that have made life more convenient, including “dental and medical equipment, antibiotics, bypass operations, safe births, control of genetically transmitted diseases, personal computers, compact discs, television sets, automobiles, opportunities for fast and cheap world-wide travel, air conditioning…” And so on. For the record, I’m quite happy for all of these advances, yet I still don’t see how anything on this list is addressing our self-inflicted mass extinction, though I suppose it’s making us comfortable in the meantime.

I could spend time addressing the factual basis of his claim that innovation requires growth, but we’ve been doing that since the 1970s, when Henry Wallich discounted the findings of Limits to Growth (DH Meadows et al.), arguing that technology would save us from the ecological crisis. We’re still waiting for this claim to ring true, and there’s a raging contemporary debate, which speaks to some lingering uncertainty about the claim. For my part, I see the invention of new technology as a response to a specific technical problem (or set of problems) rather than merely the offspring of pro-growth economic conditions.

What I find far more curious is (a) why Dr. Lipsey’s sweeping claim avoids mention of mass extinction or climate change; and (b) how this opinion can reflect the voice of so many high-profile public figures. It is true that, as Lipsey writes, “…our Victorian ancestors could not have imagined what to do with ten times as much of all of the goods that they knew about.” Yet it is also true that we have far more than ten times the goods that they knew about, and that our aggregate material footprint is still going up. Efficiency gains are a “feel good” story, but the gains have yet to reduce our aggregate material footprint at the global level.

I’m not an ideological enemy of innovation or entrepreneurship. In fact, I’m a bit of a techno-geek—I (rather shamefully) like new technologies and toys. I get irrationally excited when I see developments in green technology and transportation, and I’ve started a business. I can’t wait to use a hyperloop. But, as Lewis and Conaty write in The Resilience Imperative, I embrace the principle that efficiency without sufficiency is lost. Or to put it another way, it feels intellectually dishonest to suggest that efficiency has the potential to deliver us from a cultural propensity for overconsumption. I’m not certain why we should focus our energy on miniaturizing goods or “cleaning” our production process to the exclusion of simply consuming less. We need both.

Underpinning some of Dr. Lipsey’s claims is the epistemological assumption that innovation is merely a technological, material, or financial phenomenon. What precludes us from innovating ethically and socially, towards more desirable ends? John Maynard Keynes considered the day when society could focus on happiness and well-being rather than economic growth. He wrote, “The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems—the problems of life and of human relations, of creation and behavior and religion.” If innovation is so predetermined, why might one suggest it is possible to innovate technologically, but not towards a more sustainable economic size? That is, after all, what this growth debate is really all about.

I can’t also help but wonder whether or not Dr. Lipsey recognizes that his narrative emerged during a time when one could not see or feel the effects of a deteriorating planetary life support system. I don’t blame him for his choice to rehearse this narrative—like many 20th century thinkers, his whole identity has been constructed to promote the idea of growth. But at some point, we will all need to accept our planetary prognosis and act accordingly. It’s become exceedingly clear that price signals alone won’t preserve forests, oceans, or climate stability. Peter Victor has argued that while D.H. Meadows et al. possibly underestimated the price-mechanism’s role in adjusting economic outcomes, their critics have overestimated it.1 By the time we’ve settled on a carbon price, the planet will already have become several degrees warmer and we’ll no longer have the luxury of technocratic tinkering. Behavioral economists have also debunked the myth that humans are motivated only by price signals. Human beings are complex, irrational actors who are influenced by far more than just the almighty dollar. Many of us have given up on the neoclassical paradigm precisely because of this new knowledge. Call it innovation.

It’s not necessarily true anymore that economic growth increases our incomes and always transforms our lives for the better. Today, some features of economic growth are increasing the incomes of the richest, stagnating the incomes of the poorest, and depleting the innovative spirit of the economy. Who has the time to worry about climate change and mass extinction when they’re just getting by or more concerned about how to cash their next pension check? Ask any Greek citizen.

Perhaps we can be thankful that growth didn’t stop in 1900 or 1950, as Dr. Lipsey argues. But this isn’t 1950. We have to solve a new set of problems. There’s never been a better time to innovate the discipline of economics, and with it, our definition of progress.

 

 

Five Myths About Economic Growth

by Brian Czech

Brian CzechMyth #1. It’s economic.

To be economic, something has to be worth more than it costs. Economic activity, per se, is more beneficial than detrimental. Technically speaking, “marginal utility is greater than marginal disutility.”

If you liked a rug, but liked your grandkids more, it wouldn’t be smart to grab the rug out from under them. That’s basic microeconomics. Yet if we look around and reflect a bit, doesn’t it seem like all that economic activity is pulling the Big Rug out from the grandkids at large? Water shortages, pollution, climate change, noise, congestion, endangered species… it’s not going to be a magic carpet ride for posterity.

Growth was probably economic for much of American history. But we have to know when times have changed and earlier policy goals are outdated. In the 21st century, when we’re mining tar sands, fracking far and wide and pouring crude oil by the ton into the world’s finest fisheries, trying to grow the economy even further is looking like a fool’s errand. That’s basic macroeconomics.

Myth #2. Economic growth is often miraculous.

Right now we’ve got the Chinese miracle. We’re supposed to be on the cusp of an Indian miracle. Seems like we already had a more general Asian miracle, having to do with “tigers.”

We’ve had Brazilian, Italian, Greek (yes Greek), Spanish and Nordic miracles. There’s been the Taiwan miracle, the miracle of Chile and even the Massachusetts miracle. Don’t forget the earlier Japanese miracle and more than one historic German miracle.

Let’s hope these aren’t the kinds of miracles they use to determine sainthood. Saint Dukakis, anyone?

No, economic growth was never, anywhere, a “miracle.” It’s never been more than increasing production and consumption of goods and services in the aggregate. It entails an increasing human population or per capita consumption; these go hand in hand in a growing economy. It’s measured with GDP.

Whoop-de-do, right? Maybe Wall Street investors and journalists are an excitable lot, and it’s easy enough to be surprised by a growth rate, but “miracle?”

Container ship.NOAA's National Ocean Service

Photo Credit: NOAA’s National Ocean Service

 

Myth #3. Growth isn’t a problem for the environment, because we’re dematerializing the economy.

Now that would be a miracle.

Let’s get one thing straight: The economy is all about materials. “Goods,” in other words. Oh sure, services matter too. But the vast majority of services are for purposes of procuring, managing or enjoying our goods.

The biggest service sector, transportation, is responsible for enormous environmental (and social) impacts. Transportation is instructive, too, about the relationship between goods and services. People don’t line up at cash registers demanding random acts of transportation. No, it’s all about moving materials—goods or people—from point A to point B, and moving them economically. Every form of transportation takes energy as well as copious supplies of materials (for vehicles and infrastructure) and space.

With all the talk of “de-materializing,” surely there must be services that transcend the physical, right? What about the Information Economy?

Myth #4. The human economy went from hunting and gathering through agriculture and on to manufacturing, and finally to the Information Economy.

Don’t forget our lesson from the transportation sector: no transportation for transportation’s sake. In the “Information Economy,” what’s all that information going to be used for? If it’s not going to be used in activities such as agriculture and manufacturing (and transportation) how is it going to matter for economic growth?

The fact is, there never was—or always was—an information economy. Pleistocene hunters needed to read mammoth tracks more than we need to read our Twitter feed.

Now when it comes to processing information, the computer was more or less a “revolutionary” invention, like the internal combustion engine was for transportation. But what’s less material about it? Just as today’s hunters have semi-automatic rifles with high-power scopes, they have (material) computers that help them gather information for buying more (material) guns, scouting more (material) terrain and shooting more (material) deer. Anything about that seem greener than before?

Information has proliferated alright, in lock step with the material goods and services it’s been used for. Yet to speak of the “Information Economy” seems like grabbing for some type of economic miracle, and we’ve all seen how cheap miracles are in economic rhetoric.

Myth #5. At least economic growth is egalitarian, because a rising tide lifts all boats.

Once upon a time the rising tide metaphor may have had some merit. In the 21st century—think resource wars, climate change, endang­ered species—it’s more like a rising tide flooding all houses. Which brings us back to Myth #1.

It seems like all the talk of economic growth was overblown, more the result of Wall Street excitement and political rhetoric than sober thought. Maybe what we really want is economic slenderizing.

 

 

The Pope Francis Encyclical And Its Economics

By Brent Blackwelder

Brent BlackwelderThe Encyclical Letter of Pope Francis is attracting extraordinary attention for its message on global warming, deforestation, loss of biological diversity, and other pressing environmental issues. What is less well known is the extensive critique of the global economy found in his 184-page Encyclical. This blog highlights some of the significant points that Pope Francis makes about the need for systemic economic change.

Although the Pope does not use the phrase “steady state economy” or “true-cost economy” his message provides a comprehensive moral argument for a systemicshift to a new economy.

2014 Pastoral Visit of Pope Francis to Korea Closing Mass for Asian Youth Day  August 17, 2014  Haemi Castle, Seosan-si, Chungcheongnam-do  Ministry of Culture, Sports and Tourism Korean Culture and Information Service Korea.net (www.korea.net)  Official Photographer : Jeon Han This official Republic of Korea photograph is being made available only for publication by news organizations and/or for personal printing by the subject(s) of the photograph. The photograph may not be manipulated in any way. Also, it may not be used in any type of commercial, advertisement, product or promotion that in any way suggests approval or endorsement from the government of the Republic of Korea. If you require a photograph without a watermark, please contact us via Flickr e-mail. --------------------------------------------------------------- 교황 프란치스코 방한 제6회 아시아 청년대회 폐막미사 2014-08-17 충청남도 서산시 해미읍성 문화체육관광부 해외문화홍보원 코리아넷  전한

Pope Francis. Photo Credit: Korean Ministry of Culture, Sports and Tourism

I present a series of quotations to illustrate portions of the Pope’s forceful arguments. If we are to obtain systemic economic change, we need new, motivated allies. The Encyclical is a key tool to motivate religious congregations to be front and center in this economic debate to counter the greed and rapacious behavior of numerous governments and large corporations.

In Section 54 the Pope takes sharp aim at the control of politics and finance that prevent urgent changes from being made:

The failure of global summits on the environment make it plain that our politics are subject to technology and finance. There are too many special interests, and economic interests easily end up trumping the common good and manipulating information so that their own plans will not be affected. The alliance between the economy and technology ends up sidelining anything unrelated to its immediate interests. Consequently the most one can expect is superficial rhetoric, sporadic acts of philanthropy and perfunctory expressions of concern for the environment, whereas any genuine attempt by groups within society to introduce change is viewed as a nuisance based on romantic illusions or an obstacle to be circumvented.

Pope Francis repeatedly questions whether the global economy is furthering the common good. In Section 109 he writes:

The economy accepts every advance in technology with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated…” In Section 189 he looks again at the financial collapse of 2008: “Politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy. Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life. Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.

Pope Francis waxes eloquent on the subject of externalities in Section 195:

The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity, or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved. ‘Yet only when the economic and social costs of using up shared environmental resources are recognized with transparency and fully borne by those who incur them, not by other peoples or future generations,’ can those actions be considered ethical. An instrumental way of reasoning, which provides a purely static analysis of realities in the service of present needs, is at work whether resources are allocated by the market or by state central planning.

Pope Francis talks about product diversification and consumerism; in Section 129 he extols the virtues of the “great variety of small-scale food production systems which feed the greater part of the world’s peoples.”

As Pope Francis points out, he is building on the messages that popes such as John XXIII, Paul VI, John Paul II, and Benedict XVI have given on these problems. For example, Pope Benedict XVI proposed “eliminating the structural causes of the dysfunctions of the world economy and correcting models of growth which have proved incapable of ensuring respect for the environment.” Pope Paul VI wrote: “the most extraordinary scientific advances, the most amazing technical abilities, the most astonishing economic growth, unless they are accompanied by authentic social and moral progress will definitively turn against man.”

My hope is that the Pope’s message will be translated by religious congregations into tangible actions to make substantive changes in the economic drivers of environmental destruction. New allies are urgently needed.

One good place for tangible action is to go after the cheater economics being used by the G 20 nations to push tens of trillions of dollars into mega-infrastructure projects without regard to social, environmental, or climate impacts. (See my January 2015 blog for details on this subject.)

 

Good Health Requires Different Economics

by Dr. Trevor Hancock

Editor’s note: A version of this post ran originally in the Times Colonist.

TH - PHSPFor the past three years, I have been leading an important project for the Canadian Public Health Association (CPHA), which led to the release on May 25th of our Discussion Paper and a 100-page technical report on global change and public health.

In these documents, we identify what we call the “ecological determinants of health”: clean air and water, food, materials, fuel, the great cycles of water, nitrogen and phosphorus, detoxification of wastes, climate stability, and others.

These determinants of health come from the Earth’s natural ecosystems, and they are threatened by the massive and still growing human-induced global ecological changes now underway. These changes thus represent the greatest threat to the health of the public in the 21st century. They include the following:

  • Global warming and resultant climate instability;
  • The contamination of all ecosystems and food chains—and all humans—with persistent organic pollutants and other novel entities such as nano-particles;
  • The depletion of key resources and damage to ecosystems that provide life-supporting “goods and services”; and
  • The loss of species and biodiversity, a human-induced “sixth great extinction” that threatens the overall web of life.
dreamstime_s_26094052

Human-induced global ecological changes are threatening public health.  Photo Credit: © Stockshoppe | Dreamstime.com

Here I explore some of the many issues and approaches we discuss in our report, beginning with the underlying values and beliefs that drive the ecological changes we are witness to, and the changes in those values and beliefs we need to create.

The drivers of the ecological changes noted above, now collectively being referred to as “The Anthropocene,” are a combination of population growth and affluence, with technology sometimes amplifying and sometimes reducing their impact. But underlying these drivers is an increasingly globally shared set of values and beliefs that together comprise “modernism.” The central value is a belief in “progress,” and that progress equates with growth, especially growth in material wellbeing.

This leads to the pursuit of economic growth to meet the growing demands of a growing population. But this is the fundamental problem because, in our current economic system, growth means more demands on the Earth’s natural resources and more damage to its ecosystems.

Such damage is resulting in the decline, and may result in the collapse, of key ecosystem functions that are the basis for the life and survival of humans and other life forms; when ecosystems decline or collapse, so too do the societies that are dependent upon them. This damage in turn undermines the economy and threatens the continued wellbeing and even the very survival of communities, societies, and our increasingly interconnected global civilisation.

Moreover, as resources become scarce and ecosystems fragile, those with wealth and power will ensure their access to them, even if it means others—including other humans and other species—have less. This will both heighten global and local inequity and push more ecosystems toward collapse and more species toward extinction. It will also heighten the potential for both local and global strife.

Faced with these immense challenges of potential ecological and social decline and collapse, the only answer from conventional economics is more growth. But continued conventional growth in a finite system—the Earth—is clearly impossible when it involves more growth in demand for resources and more strain upon our increasingly fragile life-supporting ecosystems. There are indeed limits to growth—or to be more precise, there is a limit to growth, and that limit is the Earth itself.

Our current economic system is broken and must be discarded and replaced with an economic system that is compatible with the Earth and all its ecosystems and resources. This will require a massive global change in the underlying cultural and political values that drive our current economic system.

That change has to begin with the wealthy countries because we cannot say, in effect, that we will keep what we have but the rest of the world cannot have what we have because there isn’t enough to go around. We in the wealthy countries need to shift our focus from the pursuit of economic development to the pursuit of a higher goal: human development that is equitable and sustainable.

After all, what business are we in—or should we be in—as societies and governments? Are we here to grow the economy? Is that really the ultimate human purpose? Or are we here to “grow” people? And are we here only to “grow” some people—people like us, perhaps?—or are we here to pursue a more noble purpose: ensuring the achievement by everyone of the highest human potential of which they are capable, in a manner that is ecologically sustainable and socially just?

Dr. Trevor Hancock is a public health physician and a professor at the School of Public Health and Social Policy at the University of Victoria. He has played a key role in founding several environment-focused organizations, including the Canadian Association of Physicians for the Environment and the Canadian Coalition for Green Health Care. In the 1980’s, Dr. Hancock was one of the founders and the first leader of the Green Party in Canada. 

thancock@uvic.ca

 

Thoughts on Pope Francis’ Laudato Si

by Herman Daly

Herman DalyAs a Protestant Christian my devotion to the Catholic Church has been rather minimal, based largely on respect for early church history, and for love of an aunt who was a nun. In recent times the Catholic Church’s opposition to birth control, plus the pedophile and cover-up scandals, further alienated me. Like many others I first viewed Pope Francis as perhaps a breath of fresh air, but little more. After reading his encyclical on environment and justice, dare I hope that what I considered merely “fresh air” could actually be the wind of Pentecost filling the Church anew with the Spirit? Maybe. At a minimum he has given us a more truthful, informed, and courageous analysis of the environmental and moral crisis than have our secular political leaders.

True, the important question of population was conspicuous by its near absence. In an earlier offhand remark, however, Francis said that Catholics don’t need to breed “like rabbits,” and pointed to the Church’s doctrine of responsible parenthood. Perhaps he will follow up on that in a future encyclical. In any case, most lay Catholics have for some time stopped listening to Popes on contraception. The popular attitude is expressed in a cartoon showing an Italian mamma wagging her finger at the Pontiff and saying, You no playa da game; you no maka da rules.” Discussing population would not have changed realities, and would have aroused official opposition and distracted attention from the major points of the encyclical. So I will follow Francis’ politic example and put the population question aside, but with a reference to historian John T. Noonan, Jr.’s classic book, Contraception,1 which sorts out the history of doctrine on this issue.

The big ideas of the encyclical are Creation care and justice, and the failure of our technocratic growth economy to provide either justice or care for Creation. Also discussed was the integration of science and religion as necessary, though different, avenues to truth. And yes, the Pope supports the scientific consensus on the reality of climate change, but, media monomania to the contrary, the encyclical is about far more than that.2

Pope Francis.aletela.org

Pope Francis’ environmental encyclical “Laudato Si, On Care for our Common Home” was released on June 18. Photo credit: Aletela.org

Francis’ voice is of course not the first to come from Christians in defense of Creation. In addition to his ancient namesake from Assisi, Francis also recognized Ecumenical Patriarch Bartholomew of the Eastern Orthodox Church, who has for two decades now been organizing conferences and speaking out in defense of rivers and oceans, including the Black Sea. The Orthodox Church lost a generation of believers to Communistic atheism, but is gaining back many young people attracted to the theology of Creation and the actions it inspires. Liberal mainline Protestant Christians, and more recently, conservative Evangelicals, have also found their ecological conscience. So Francis’ encyclical would seem to be a capstone that unifies the main divisions of Christianity on at least the fundamental recognition that we have a shamefully neglected duty to care for the Earth out of which we evolved, and to share the Earth’s life support more equitably with each other, with the future, and with other creatures. Many atheists also agree, while claiming that their agreement owes nothing to Judeo-Christian tradition. That is historically questionable, but their support is welcome nonetheless.

This theology of Creation should not be confused with the evolution-denying, anti-science views of some Christian biblical literalists (confusingly called “Creationists” rather than “literalists”). Mankind’s duty to care for Creation, through which humans have evolved to reflect at least the faint image of their Creator, conflicts headlong with the current dominant idolatry of growthism and technological Gnosticism. The idea of duty to care for Creation also conflicts with the materialist determinism of neo-Darwinist fundamentalists who see “Creation” as the random result of multiplying infinitesimal probabilities by an infinite number of trials. The policy implication of determinism (even if stochastic) is that purposeful policy is illusory, both practically and morally. Creation care is also incompatible with the big lie that sharing the Earth’s limited resources is unnecessary because economic growth will make us all rich. Francis calls this magical thinking. He skates fairly close to the idea of steady-state economics, of qualitative development without quantitative growth in scale, although this concept is not specifically considered. Consider his paragraph 193:

In any event, if in some cases sustainable development were to involve new forms of growth, then in other cases, given the insatiable and irresponsible growth produced over many decades, we need also to think of containing growth by setting some reasonable limits and even retracing our steps before it is too late. We know how unsustainable is the behaviour of those who constantly consume and destroy, while others are not yet able to live in a way worthy of their human dignity. That is why the time has come to accept decreased growth in some parts of the world, in order to provide resources for other places to experience healthy growth.

In the last sentence “decreased growth” seems an inexact English translation from the Spanish version “decrecimiento,” or the Italian version “decrescita” (likely the original languages of the document), which should be translated as “degrowth” or negative growth, which is of course stronger than “decreased growth.”3

Laudato Si is already receiving both strong support and resistance. The resistance testifies to the radical nature of Francis’ renewal of the basic doctrine of the Earth and cosmos as God’s Creation. Pope Francis will be known by the enemies this encyclical makes for him, and these enemies may well be his strength. So far in the US they are not an impressive lot: the Heartland Institute, Jeb Bush, Senator James Inhofe, Rush Limbaugh, Rick Santorum, and others. Unfortunately they represent billions in special-interest money, and have a big corporate media megaphone. The encyclical calls out the opponents and forces them to defend themselves. To give them the benefit of the doubt, they may really think that Francis is rendering to God what actually belongs to Caesar’s oligarchy. But neither Caesar, nor the market, nor technology created us, or the earth that sustains us. Thanks to Francis for making that very clear when so many are denying it, either explicitly or implicitly.

 


Notes:

1. John T. Noonan, Jr., Contraception: A History of its Treatment by the Catholic Theologians and Canonists, Belknap Press, 1986. Noonan demonstrates the lack of a biblical basis for opposition to contraception, as well as the origins of church doctrine in secular Roman law, which was absorbed into canon law. The ancient Roman meaning of “proletariat” was “the lowest class, poor and exempt from taxes, and useful to the republic mainly for the procreation of children.” Clearly contraception was not indicated for them, although tolerated for patricians. This literal meaning of proletariat as the prolific class was lost when Marx redefined the word to mean “non owners of the means of production.” But the Malthusian connection with overpopulation and cheap labor has remained real, even if downplayed by Marxists as well as Catholics.

2. The Pope’s condemnation of carbon trading reflects a common misunderstanding of the cap-auction-trade policy, unfortunately shared by some leading climate scientists. See Joseph Heath, “Pope Francis’ Climate Error,” New York Times, June 19, 2015.

3. Thanks to Joan Martinez-Alier for pointing this out.

 

The Future History of Political Economy – Part 2

Thermodynamics in Economics: Revolutionary portent, future history

by Eric Zencey

Eric ZenceyEcological Economics represents the extension into economics of the thermodynamic revolution of the nineteenth and twentieth centuries. In physics, that revolution dethroned Newton and brought relativity. In biology, it was midwife to the birth of ecology, the study of ecosystems as wholes in which energy networks—food webs—are a defining structure. In chemistry the laws of thermodynamics brought clarity and rigor to a science that struggled to bring theoretical unity to diverse phenomena. So far, though, most economists are perfectly willing to treat their subject matter as if the laws of thermodynamics simply don’t apply to it.

2 models 5

But the thermodynamic revolution in economics can’t be permanently forestalled. For one thing, it’s getting harder and harder for the neoclassical model to reassure us that its system of Newtonian abstractions is a good fit to the real world. The Great Collapse of 2008 demonstrated that whatever else it is, the discipline of economics isn’t very good at predicting major economic phenomena. Climate change and the Sixth Extinction make it hard for economics to maintain its pretense that economic activity takes place in abstractia, on the clean white pages of textbooks or on whiteboards holding formulae, with no roots in or consequences for anything outside of itself. Truths derived on the model of Newtonian mechanism are supposed to be abstract and ahistorical, but our planet and our economy are most assuredly evolving concretely and over time.

The driving dynamic of this economic and planetary change—the driver of history for the past three centuries—has been human use of high-EROI fossil fuel. The driving dynamic of the history yet to come will be the declining EROI of our civilization’s energy sources.

Oil Well 3.Texas State Archives

Oil used to gush out of the ground under pressure, making for a very high Energy Return on Energy Invested (EROI). In the 1920s, wells like this gave the industry an average EROI of 100 to 1 or more. Today’s petroleum industry has a much lower EROI. Photo Credit: Texas State Archives

You can see some of the consequences of declining EROI already:

  • Despite a rising real per capita GDP, for a significant percentage of workers in OECD nations personal income has flatlined or is declining. An increasing concentration of income helps explain this but another dynamic is at work as well. As EROI falls, it takes more economic effort to get the energy that’s needed to support economic effort. Even as gross economic activity (GDP) grows, production of net benefit is shrinking.
  • Other sectors of the economy have been affected by this ongoing increase in the economy’s matter-and-energy overhead. “Austerity” has become the watchword for governmental budgets, even in the wealthiest nations in the world. Developed countries find it increasingly difficult if not impossible to pay maintenance and upgrade costs on infrastructure investments made in the heyday of 100-to-1 oil.
  • In its 2013 report card on America’s infrastructure, The American Society of Civil Engineers estimated that the U.S. needs to invest $3.6 trillion over seven years to restore and maintain existing infrastructure.
  • Worldwide, many of the ecosystems that support human civilization are degraded and close to collapse. Forced by both ideology and declining EROI into austerity budgeting, governments are reducing their scope and energy at the exact moment that sustainability would have them take strong action to rein in the rational, free-market tendency of corporations to maximize profits by degrading the commons and externalizing other costs.
  • Pension-fund wipeouts are becoming common as one way to fulfill the economy’s structural need for debt repudiation—a need that lies in our system’s willingness to let debt grow faster than a declining EROI economy can pay back, even after growth has been stimulated by lifting or reducing regulations that limit the environmental damage done by economic activity.
  • The planetary carbon sink is full, producing climatic effects that even an abstraction-inhabiting, arithmo-morphizing economist has to acknowledge as a troubling reality.

Centuries from now economic historians are likely to understand the relationship between EROI and wealth creation much better than does the average economist of today. I think it likely that future political economists will express wonder not at the 20th century’s enormous economic success, but at how little we actually added to our stock of wealth for all the high-EROI coal and oil it was our pleasure to burn. They are almost certain to shake their heads in wonder that we, enjoying an energy supply and an EROI never seen on the planet before or since, could ever have experienced an economic downturn, could ever have let a human starve from want, could ever have been so programmatically blind to the physical origins of our fortunes.