January 8, 2011

Limits to Growth

From John Michael Greer, "The Tarpaper Shack Principle"

It’s always fascinated me that in a society that claims to make most of its decisions on the basis of economics, so few people grasped the essentially economic argument at the core of the Limits to Growth analysis. That study did not claim, as so many people still insist it claimed, that the resources on which industrial society depends are going to up and run out one of these days. It proposed, rather, that the real costs of extracting resources and dealing with the consequences of environmental pollution, both of which are driven by economic growth, necessarily increase faster than the rate of economic growth itself, and sooner or later will force industrial civilization to its knees.

Perhaps the most visible signpost along the way to that destination is the point at which a society can no longer provide for its future and pay its current expenses out of existing resources. You know that point has arrived when a society begins neglecting its infrastructure, slashing basic services, discarding those economic sectors that cost too much to maintain, and abandoning those people who lack the political clout to make good a claim on slices of the dwindling pie. Readers here in America who don’t find this description oddly familiar are encouraged to take a good hard look out the nearest window.

The consequences of that logic pose an immense challenge to the more optimistic proposals for dodging the resource crunch at the end of the age of cheap petroleum – the nuclear power plants, high-speed rail networks, immense solar installations in assorted desert countries, and the rest of it. All these would require huge inputs of real wealth – not currency, which can be manufactured at will by central banks, but energy, materials, knowledge, and labor – real wealth – which are a good deal harder to conjure up out of twinkle dust. The Limits to Growth model suggests that underneath the smoke and mirrors of the financial economy lies the awkward fact of a shortfall in real wealth, caused by the need to divert a growing fraction of real wealth to meet the direct and indirect costs of extracting resources, on the one hand, and coping with the impacts of environmental pollution on the other.

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