Interview of GDP with 2XX

I spoke to Scotty Foster and Zina Richardson from 2XX on their program, Behind the Lines, on Friday 7 October.  Our discussion was wide-ranging across limits to growth and economic issues and models, including the Steady State economy. The program runs for 90 minutes.

The link to the podcast may not be available after early November:

Behind The Lines

 

Unlimited growth cannot be sustained

This article appeared as an opinion piece on page 45 of the Canberra Times on Saturday 3 September 2022:

The national State of the Environment report shocked us, detailing environmental degradation across Australia’s ecosystems.

While Labor has blamed the Coalition for a decade of neglect, our predicament is over two hundred years in the making. In the past, our environment has run a poor second to the economy, being seen as largely a sentimental issue of beautiful landscapes and cute, furry mammals.

In contrast, the most important message from the State of the Environment report is that the wellbeing of Australians is critically dependent on a healthy environment. This has been amply demonstrated by the impacts of recent bushfires, floods, and the Covid pandemic.

In this vein, the State of the Environment report made a chilling warning: “Environmental degradation is now considered a threat to humanity, which could bring about societal collapses with long-lasting and severe consequences.”

This statement is striking because it is delivered by cautious scientists in a government report. It also eerily echoes a warning to humanity from many years earlier.

In 1972, the Club of Rome released the report, Limits to Growth. Limits to Growth used a systems approach to model future outcomes for five global variables: non-renewable resources, industrial output, food, population and pollution. It ran projections for nine scenarios, but the Standard Run scenario received the most attention, because it assumed continuation of existing policies – especially ongoing growth in consumption. The Standard Run found that industrial and food production would peak in the first half of this century and then steadily drop off, leading to global population decline.

The key messages from Limits to Growth were that global material consumption could not increase indefinitely; once sustainable limits are exceeded, contraction is inevitable. The authors, however, were clear that disaster could be avoided if economic policy changes were made quickly.

Industry and economists criticised the report vociferously, often either misunderstanding or wilfully misrepresenting it. Their responses were very similar to those by more recent climate deniers. Yet, the Standard Run scenario might well be the most accurate macroeconomic projection ever.

In 2008, CSIRO’s Graham Turner found that the Standard Run had closely matched historical data over three decades. In 2020, Gaya Herrington from KPMG US found the Standard Run was still on track and projected that economic growth would peak around 2040 and then collapse.

These projections should not be surprising. Since 1968, when Apollo 8 beamed back photos of Earth from space, we have been able to see clearly the finite nature of our beautiful planetary home.
While in theory GDP growth can continue indefinitely through productivity improvements, there are clear physical limitations. Agricultural yields are constrained by biology and even the shrinking of computer chips is running into limits due to the size of atoms.

In practice, global GDP remains strongly linked to the volume of physical resources used, and there is no evidence for believing the two can be decoupled long-term. The lessons from Limits to Growth are critical to understanding our current global environmental predicament.

Climate change needs to be seen as just one example of the problems caused by humanity exceeding Earth’s capacity to self-repair. Others include freshwater pollution, degradation of soils, overfishing and the rapid extinction of plant and animal species.

Understanding Limits to Growth also leads us to look beyond the immediate causes of environmental degradation, such as land clearing and the burning of coal. We need to identify and address the drivers of these activities, particularly society’s dominant mental frames.

For example, our prevailing modernist perspective is that humanity is no longer bound by nature’s constraints. Neoclassical economics also teaches us that the environment is primarily a resource for use in economic production. Perhaps most importantly, governments worldwide have economic growth as their foremost policy goal.

The Labor party’s proposed changes to environment legislation and establishment of an Environmental Protection Agency are important steps to turning around our environmental decline, but are not sufficient. The government’s introduction of a wellbeing budget hints at more important and fundamental required changes. We need to move away from our fixation with economic growth if we are to reach a sustainable settlement with our magnificent but fragile Australian natural environment that sustains us. It is time to finally heed the message of Limits to Growth.

 

Jonathan Miller

Director

Steady State ACT

Short bio
Jonathan Miller is an ecologist who has worked on environment and economic policy in the Australian and ACT governments, and as a parliamentary advisor. He has managed national programs for threatened species and invasive species.

 

Are we beyond limits to economic growth?

The following article was published in a range of ACM newspapers on 15 August 2022, under the Fuzzy Logic column.

Are we beyond limits to economic growth?

 

Increasing gross domestic product (GDP) is seen as the highest goal for nearly every country. Economic growth is seen as the way to make society more prosperous. But can an economy grow indefinitely? If there are limits, have we already passed them?

Fifty years ago, the Club of Rome released its report, Limits to Growth. It found that if economic growth continued, global population and industrial production would peak and then decline in the first half of this century. This was due mainly to pollution and the decreasing abundance and quality of minerals.

Many criticised the report, but studies in the last decade have found that actual outcomes have closely followed the Limits to Growth modelling. The Club of Rome was considering limits to the amounts of resources used, but there is a very close relationship between this and GDP. While economists propose decoupling economic growth from resource use and pollution by increasing productivity, it is unlikely this can be done long-term.

There is strong evidence that global economic activity is already unsustainable. Humans are extracting more resources than the Earth can regenerate and creating more pollution than our planet can treat.

Earth Overshoot Day marks the day when humanity has used all the biological resources that nature regenerates each year. This year, that day was 28 July and the date is arriving steadily earlier every year. After that day, we are eating into natural capital.

This degradation of nature is not only causing climate change but also extinction of animals and plants, soil loss, shortage of clean freshwater and overfishing. Limits to Growth warned that the economy can overshoot Earth’s capacities for a while, but this must eventually lead to economic decline.

Our modern lifestyles can make it seem that environmental degradation is unfortunate but necessary for progress. The recent Federal State of the Environment report, however, made it clear that the wellbeing of Australians is dependent on a healthy environment. Recent extreme bushfires, floods and Covid provide stark reminders.

The State of the Environment report went further to warn that environmental degradation threatens humanity and could cause societal collapse – echoing Limits to Growth.

The good news is that the Club of Rome said clearly that it was possible to change path and avoid disaster.

This remains true today, but we must act quickly. A number of countries are now moving from an economic growth priority towards ‘wellbeing economies’. They are prioritising environmental protection, education, health and reducing poverty and inequality.

Jonathan Miller, Steady State ACT.

Review of Vaclav Smil’s Growth

First Appeared in Sustainable Population Australia’s Newsletter No. 138 February 2020

 

Did you know that wandering albatross chicks are up to 1.5 times heavier than their parents? Or that there is no significant difference between the economic performances of republics and monarchies? These are just two of the intriguing facts in Vaclav Smil’s latest book, Growth: From Microorganisms to Megacities.

Czech-Canadian academic, Vaclav Smil, is one of the world’s experts on energy and has been named as one of the Top 100 Global Thinkers.
Growth is striking for its level of ambition, traversing an extraordinary sweep of topics: starting with microorganisms, moving to plants and animals, before exploring trends in human energy use and the history of machines, devices, buildings and infrastructure. The final two chapters are most relevant to SPA, considering populations and economies, as well as what comes after growth.
In his section on population, Smil starts with an account of the growth of the global human numbers over the last two million years. Growth then moves to assessing the causes and effects of demographic transition (changing death rates and birth rates) and total fertility rates. Growth then discusses possible future population trends, highlighting that the main uncertainty is future fertility rates, and the global significance of those rates in sub-Saharan Africa. Smil sensibly makes no firm predictions as to future global population numbers, but does discuss Earth’s biophysical constraints on sustainable population levels.

In considering what comes after growth, Smil focuses on the implications for nations of low fertility rates. He particularly discusses Japan, concluding that its infrastructure, health care, food production and global influence will be impacted by its declining population. Readers might criticise Smil’s emphasis on age dependency, but he does not specifically identify it as a problem to be ‘fixed’.

Smil’s treatment is arguably stronger for economies than population. He starts by setting out the dramatic expansion in human economic use of energy, which has increased almost twenty-fold since 1800. Smil then considers the importance of energy inputs and fertilisers to boosting food production, noting that ‘anthropogenic’ energy (essentially fossil fuels) inputs to farming increased by a factor of 130 over the twentieth century.
Growth also covers trends in material economic inputs, particularly steel and cement. Smil makes the point that while many industrial processes have become more efficient, reduced prices have led to greater demands for consumer goods, as Jevon’s paradox would predict. He argues there has been no absolute ‘dematerialisation’ on a macro level. Smil later uses a paper lead-authored by former SPA president, James Ward, to demonstrate that GDP growth cannot be decoupled (long-term) from growth in material and energy use.

Possibly the most interesting part of Smil’s treatment of economies canvasses the sources of economic growth. He supports the argument that the ‘second industrial revolution’ from 1870 – 1900 (with the introduction of internal combustion engines, running water, oil extraction and chemical industries) was more consequential to economic growth than the start of the industrial revolution or the digital revolution. Smil goes on to consider the positive effects of the demographic transition on national economic performance: the demographic dividend.
Those hoping to find a strong position on population will be disappointed; Smil is his own man, often contrarian, and would doubtless vigorously resist co-option into any activist movement. On most matters, Smil retains the scientist’s measured approach and avoids definitive statements on contentious topics. He is, however, scathing of poorly constructed arguments and flawed methodologies. For example, he criticises the Club of Rome’s Limits to Growth algorithms for using what he considers are meaningless input variables.

Smil also brings a physicist’s critical eye to neoclassical economics, rehearsing common critiques of GDP as an indicator of national wellbeing. He also criticises neoclassical economics for its failure to recognise the importance of energy inputs and material flows to economic activity, stressing the impossibility of ongoing economic growth. He similarly points out the long-term material impediments to implementing a circular economy.

Smil works his way slowly to his conclusion as he focuses on the global environmental effects of human economic activity. He does not explicitly predict the collapse of the natural environmental or civilisations, or the nature or timing of disruptions. He does, however, firmly assert that the pursuit of economic growth, extending consumerism and treating the biosphere as merely exploitable resources “must change in radical ways”. Smil concludes that “The long-term survival of our civilization cannot be assured without setting…(economic) limits (at) the planetary scale.”

While Growth is not a polemical text, it does contain useful material for the activist. Beyond that, it is a fascinating read.

The Growth-Based Paradigm versus Earth Ethics by Michael Bayliss

Michael Bayliss is the Communications Manager at Sustainable Population Australia. In this paper to the 2019 Earth Ethics Conference, Michael considers the prevailing growth-based paradigm from an earth ethics perspective.

I would like to open with a fairly direct question:

Who in this room believes we can grow infinitely on a finite planet, even in the event that the globe switches to 100% renewable energy?

It is fair to say that much of the modern environmentalism focuses in two broad areas.  One, a global movement to end fossil fuels and transition to renewable energy and eco-technological fixes. Secondly, local movements that aim to protect discrete pockets of land or water from the onslaught of ‘development’ or ‘progress’.

I do not wish to undermine the critical importance of these campaigns, but I do wish to make the claim that without deeper structural claims, these endeavours will suffer the fate of trying to fan out the flames of ever-larger spot-fires.

Let’s look at a few examples:

  • Electric cars have been widely touted as the big techno-fix to our transport pollution crisis. However, recently there have been reports that the pile-up of old batteries are creating a brand new waste crisis.
  • The new Adani mine site will add between 240,000 and 750, 000 tonnes of carbon dioxide to global emissions per year. Compare this with the fact that Australia’s domestic emissions increased the past year by 6 million tonnes due to a growth in population of 460, 000, despite modest decreases in per capita consumption
  • For every tree we plant, or every old-growth forest that we may save (for the short term at least), Australia is losing two million hectares of land to urban sprawl annually.

In my opinion, the environmental movement deals with the symptoms, rather than the core issues.  This is why, although enjoying short terms successes, it often feels like we are re-arranging the deck chairs of the Titanic.   There are two root causes as far as I am aware:

  • We have an anthropocentric economic model that presupposes infinite growth on a finite planet, which I will talk on further;
  • That there is an inherent mindset issue in which humans place themselves distinct from, and superior to, the rest of the ecosystem. This leads to social and economic systems that are parasitic on natural systems rather than symbiotic.  My colleague Mark will talk to this soon.

It can often be quite shocking and insidious when we realise, as a society, how habituated we are to growth, to the extent where many of us can’t envision a world without GDP.  This is despite the fact that capitalism is only several hundred years old, the GDP has only been used a measuring tool since world war two and that neo-liberalism has only been around since the late 1970s.

Yet politicians and business leaders would have us believe that it has been around forever.

Ronald Regan said in the 1980s:

There are no such things as limits to growth, because there are no limits to
the human capacity for intelligence, imagination, and wonder.

This underpins an enduring myth that human intelligence will trump physical limitations and the historical reality that virtually all past human societies have collapsed or shrunk whenever they have exceeded their biological carrying capacity (as Jared Diamond’s book ‘Collapse’ informs).

It is a myth that pervades modern political discourse. Think of all the times we have been sold the mantra of ‘jobs and growth’ in previous elections.  A recent former Australian minister has even said something along the lines of ‘there’s no point in protecting the environment if we ruin the economy by doing so’.

This paradigm has also appropriated some of the environmental movement.  We now have such oxymorons as ‘green growth’, ‘decoupled growth’ in addition to the magic wand of ‘innovating our way out of problems.’  This is despite the fact historically, almost all technological innovations create more problems than they save.  The Jevons paradox (in which increased efficiency leads to more demand for a resource) is one example.  There is no free lunch from deviating from natural systems, as much as we like to keep trying to delude ourselves.

At the 11th hour, recognition of this unavoidable fact is starting to hit the mainstream.  Last month, the Financial Times, published an article by Harry Haysom, “The Myth of Green Growth,” in which he states that “green growth probably doesn’t exist.”  Greta Thunberg talked about ‘the fairy-tale of eternal economic growth’ at the UN forum.  Even the New Zealand prime minister, Jacinda Ardern, has been critical of the GDP model of economics, saying:

Economic growth accompanied by worsening social outcomes is not
success. It is failure

It is worth showing a few graphs of what relentless growth this past century actually looks like.   The first of these is the ‘great acceleration’ courtesy of the Stockholm Resilience Centre, where accelerating human impact is resulting in an accelerating loss of natural capital.  Earth Overshoot Day, the day each year when we exceed planetary capacity to replenish resources, is falling earlier every year.  This year we reached this on the 29th of July.

Systemically, we are benefitting one species at the expense of all other species, and the result is a rapid descent towards the Anthropocene mass extinction.  These graphs show humans and livestock versus all other vertebrates enjoying life in their natural habitat.  This is essentially a bottleneck.

You would think that all the effort we put into destroying all other life forms on the planet in exchange for our own short-term material gain might at the very least result in a sense of happiness and comfort.  Yet we are depressed, anxious, disconnected, alone, and the disparity between the haves and have-nots is ridiculous.  In essence, we are miserably killing everything around us because deep many of us believe deep inside that there is no alternative to growth.

We must move out of this mindset and create economies, societies and cultures that are self-limiting and part of the larger web of life.

There is a growing wealth of information out there, beyond the scope of a one-hour conversation, and I would further explore the book ‘The Economics of Arrival’,  the websites ‘Post-Growth Institute’ and ‘Steady State ACT’,  the journal ‘Ecological Economics’  and particularly recent articles from Haydn Washington and Michelle Maloney,  as these cover alternative economic systems in greater depth.  I just want to touch on a few of the main drivers of growth-based society and how I believe these need to be addressed.

 

  1. The ecosystem as a legally recognised entity.

Just to provide a few examples of this.  In Ecuador, a new constitution has incorporated a ‘commitments to the rights of nature’ and a national strategy explicitly ‘sets aside the restricted visions of development exclusively based on economic growth’ in favour of a more holistic vision of ‘good living’.

Bolivia has drawn up a Bill of Rights for the ‘Madre Tierra’ (mother earth), which includes the right for natural cycles to proceed without interruption.

New Zealand has bestowed rights on Whanganui river, with legal rights to its own integrity.

Examples such as this must be the norm and not the exception, as this provides not only a check and balance but also a legal structural barrier.

 

  1. GDP to be replaced by other economic models

GDP is an incredibly fraught model.  It recognises oil spills, the felling of old-growth forests and medicine sales for depression as great for the economy yet fails to recognise the loss of natural capital as anything other than an externality.

The genuine progress indicator (GPI) actually views the natural capital as an asset, and the loss of the environment as a cost.  It takes into account individual happiness and well-being and the value of the voluntary, gift and informal economies (that get overlooked by GDP).

Costa Rica is a good example.  Although GDP per capita is below many countries in the OECD, it excels in measures such as equality and happiness. Furthermore, as the country has a stable population and is not pursuing economic expansion, much of the country is protected nature.  This is instilled in the national psyche, that nature is a responsibility that must be protected with stewardship.

 

  1. Reduction in per capita consumption 

Definitely more of a pressing responsibility in the global north.  One interested intersection is around the appeal for shorter working weeks. This would allow people more time to engage with their communities and participate in informal economies.  This is great for mental and physical well-being and terrible for consumerism, as less disconnected people are less likely to indulge in materialism on lieu of meaningful connection.  Additionally, if people have more time to connect with nature, the more likely that are to value the ecosystem in which they live and want to protect it.

Town planning plays a key role here.  Communities built around village styles encourage people to interact, to engage in informal economies and to share resources.  Unfortunately, many growth-based societies, such as Australia, view housing as an investment ahead of liveability.  This results in outer suburban sprawl or high-rise consolidation that forces people to live their lives around how their communities are designed, e.g. long commutes and a reliance on the market to provide essential services rather than their neighbours and communities.

 

  1. Population

This is a controversial topic but one that needs to be discussed.

If we are to truly make changes to our relationship with our ecosystems, then the causational role that population plays must come out of the woodwork.

For example, a study of 114 nations found that human population density predicted with 88 per cent accuracy the number of endangered birds and mammals as identified by the International Union for the Conservation of Nature.  This was despite wide differences in per-capita wealth between countries, indicating that population is a larger causational factor than many in the environmental movement believe.

In a recent Newsweek essay, Michael Shank states that stabilizing and reducing human population is “a necessary conversation that we can’t keep avoiding.”

In Australia, there are deliberate population growth policies designed to boost GDP, largely via the housing and property sectors.  This is one of the reasons why we are losing so much wildlife and biodiversity. According to a Sydney University seminar held earlier this year, Australia is losing two million hectares of land to urban sprawl annually.  And creating a wedge between population and consumption is unhelpful.  It doesn’t matter whether we line our new houses with solar panels, drive low emission cars on the new roads, or buy plant-based foods at the new local supermarket (that was once a home to a diversity of native species).  Once we have concreted and paved over an eco-system, that’s it.  That is another piece of land that was once called home by many different species that has now been invaded for the use for humans.

Looking at the graphs, the decision to have one less child makes a far greater impact that an individual can do compared with any other individual lifestyle changes.  This is because there is one less person around to grapple with the power of will to make the myriad of lifestyle changes that are required to make any significant difference.

Fortunately, addressing population does not have to be the brutal one child or anti-immigration policies that many fear.  Grassroots cooperation between countries in which women are empowered to choose the size of their families with access to affordable family planning services always ends in not only reduced family sizes but better equality and health outcomes for mothers, children and communities alike.  We can all agree that this is a great moral outcomes regardless of whether we believe global population is an issue.  On the domestic level,  if population policy is decoupled from the interests of big business, and if immigration policy is democratised, I think we would end up a range of better outcomes such as better town planning policies, better humanitarian outcomes, and a mitigating effect on the expansionist policies of big business and mainstream governments.

Photo credit: Boorangoora/Lake McKenzie on K’gari/Fraser Island by Jonathan Miller.

Is A Sustainable Future Possible?

Dr Graham Turner is one of Australia’s leading thinkers on sustainability matters. He previously updated the Club of Rome’s Limits to Growth analyses and found that after four decades they were still on track. In this paper, Turner explores what would be required for Australia to achieve true sustainability, and some of the barriers to that:

Is A Sustainable Future Possible?