is not self-evident. When most of us think of growth we think of linear growth. Things increase incrementally but by a steady number so the amount being added is always constant. The number series 1,2,3,4,5,6 and so on is an example of linear growth. So is 2,4,6,8,10,12 etc. But exponential growth (also called geometric growth or sometimes compounding growth) is very different. An exponential growth rate of 100 per cent for example would look like this: 1,2,4,8,16,32,64,128 etc. Plotted on a graph the action starts slowly, and then skyrockets dramatically. It’s what investment advisors refer to as the ‘miracle of compound growth’. For example, if you invest $1,000 at a 4.5-per-cent annual interest rate, you’ll wind up with $1,045.94 at the end of one year. The second year’s interest is then 4.5 per cent of $1,045.94 and so on. At the end of 30 years you’d have a total of $3,847.70. But exponential growth really begins to explode as time increases. If somehow you discovered the fountain of youth and lived to 150, your initial $1,000 would have ballooned to $736,959.41!
The UK-based New Economics Foundation (NEF) uses the analogy of a hamster whose weight doubles weekly to illustrate the concept of compound growth.
‘From birth to puberty a hamster doubles its weight each week. If, then, instead of leveling-off in maturity as animals do, the hamster continued to double its weight each week, on its first birthday we would be facing a 9-billion-tonne hamster. If it kept eating at the same ratio of food to body weight, by then its daily intake would be greater than the total annual amount of maize produced worldwide. There is a reason that in nature things do not grow indefinitely.’8
In nature, of course, growth is inevitably constrained by physical limits and a complex interplay of natural relationships. If the food supply for one species increases, then the population of that species will multiply to take advantage of the available food. Soon more predators will be attracted to the expanding numbers and the growing population will eventually deplete the food source and numbers will plummet. Nature is a hard taskmaster. A boom is always tempered by a bust.
Malthus and Mill
Herein lies our dilemma. Our current economic model is based on the notion of endless growth. Yet we live in a bounded, finite world, a world with physical limits. In the end the two are irreconcilable. How can increases of population, industrial production and limitless consumption continue, forever, on a finite planet?
The Reverend Thomas Malthus was one of the first thinkers to address this question in An Essay on the Principle of Population, first published around 1800. Malthus, an Anglican cleric, pondered the question of exponential population growth in relation to available resources and food supply. Malthus feared that global population would increase faster than the earth could support and that this inevitable trajectory would lead to widespread famine and disease.
‘Must it not then be acknowledged by an attentive examiner of the histories of mankind,’ Malthus wrote, ‘that in every age and in every State in which man has existed, or does now exist, that the increase of population is necessarily limited by the means of subsistence… and the actual population kept equal to the means of subsistence, by misery and vice.’
Malthus’s gloomy vision was out of step with the upbeat enlightenment values of 18th- and 19th-century Europe. And, as it turned out, he misjudged the impact of science and technology on food production. The introduction of mechanized farming, combined with the spread of oil-based fertilizers and pesticides, increased harvests beyond imagination. Malthus also failed to take into account the link between falling birth rates and improved living standards. As industrialized societies became wealthier and women gained some measure of economic independence, birth rates leveled off dramatically.
Around 2,000 years ago, with the Roman Empire and the Han dynasty in China at their peaks, there were 300 million humans spread around the globe. By the time Malthus was penning his population thesis 1,800 years later there were thought to be around a billion people on the planet. By 1950, a century and a half later, that number had increased to 2.5 billion. Then the exponential growth factor really began to kick in: by 2005, just 55 years later, there were 6.5 billion people, an increase of 160 per cent. The UN now says we’re on target to reach 9 billion by 2050.
But it’s by no means a sure thing. A lot depends on the variable that Malthus missed, what demographers call the ‘fertility rate’ or the number of children a woman will have during her lifetime. Already the fertility rate is below replacement level in more than 75 countries, which means that populations are falling in those nations before migration is taken into account. Why? Well, the answer is not straightforward but it appears there is a clear link between a falling fertility rate and women’s empowerment. The more economic power and the more education that women have, the more likely they are to choose to have fewer children. The UN projects future population numbers using low, medium and high fertility forecasts. With a low fertility rate (entirely feasible given current trends) the agency predicts a leveling off and then decline in world population. Numbers will peak in 2050 at 8 billion, then start to gradually decline so that by 2100 we will be back to where we were in 1998 with around 6 billion people.
But Malthus wasn’t the only growth skeptic. The classical economist and philosopher John Stuart Mill reckoned that a growing economy was necessary up to a point but that eventually a ‘stationary state’ would be needed to replace the ‘trampling, crushing, elbowing and treading on each other’s heels’ that characterized the rough-and-tumble nastiness of Dickensian Britain.
Mill was an economist but his interests ranged widely over philosophy and political economy. He was concerned with big issues and fundamental questions:
‘Towards what ultimate point is society tending by its industrial progress? When the progress ceases, in what condition are we to expect that it will leave mankind… It must always have been seen, more or less distinctly, by political economists, that the increase of wealth is not boundless: that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that each step in advance is an approach to it.’9
Mill envisaged a post-capitalist world of co-operative enterprise where greed and avarice would fade and growth would be unnecessary. Once the problems of production were solved he imagined ‘a well-paid and affluent body of laborers… not only exempt from coarser toils, but with sufficient leisure, both physical and mental, from mechanical details, to cultivate freely the graces of life…’10
Mill was perhaps ahead of his time in predicting that endless economic growth was inevitably self-defeating. But others were to follow in his footsteps.
Soddy and Keynes
One of the most notable, but largely unsung, critics of the orthodox growth model was the British chemist-cum-economist Frederick Soddy. In the wake of World War One, Soddy was devastated by the role his fellow scientists had played in the senseless carnage. He decided to devote himself to political economy and brought his formidable scientific background to the task. (He had already won the 1921 Nobel Prize in chemistry for his work on radioactive decay.) Soddy began by looking at the laws of thermodynamics, which you may remember from your high-school physics classes.
The first law says that energy can neither be created nor destroyed; it can only be transformed from one form to another. For example, when gasoline is burned in your car’s engine you are converting the original solar energy captured millions of years ago into mechanical energy, plus heat and waste exhaust. The first law leads elegantly into the second law, sometimes known as the ‘entropy’ law. The second law says that every time energy is converted from one form to another we lose some of the initial energy in the form of dissipated heat. What that means is that all energy use flows from low entropy to high entropy. In other words, the world is in a long downhill slide. And the higher the entropy, the less likely we are able to use that form of energy in any useful way.
What
