Energy and the Limits to Economic Growth

Gregor McDonald points to Liebig's Law, or the Law of the Minimum, in casting doubt on the idea that the world economy will triple its output by 2050, as recently proposed by HSBC. A concept developed in agricultural economics, Liebig's Law states

that growth is controlled not by the total of resources available, but by the scarcest resource (limiting factor). This concept was originally applied to plant or crop growth, where it was found that increasing the amount of plentiful nutrients did not increase plant growth. Only by increasing the amount of the limiting nutrient (the one most scarce in relation to “need”) was the growth of a plant or crop improved.This principle can be summed up in the aphorism, “The availability of the most abundant nutrient in the soil is as available as the availability of the least abundant nutrient in the soil.”

McDonald comments that Liebig's Law

has the most relevancy today as oil–the high density energy source that built out Western societies over the past century–becomes the limiting factor to growth. Indeed, we see that reflected now in the US economy’s inability to produce enough jobs to meet its own carrying capacity. The US, and the West, have permanently lost access to the cheap energy inputs that would allow their economies to recover.