land – and not by generating renewable flows.’15
By the mid-1970s the critics had won. Concerns about limits to growth began to recede from public debate. Yet the report’s findings continued to resonate in the burgeoning environmental movement. Indeed, Limits to Growth changed the language of environmental discourse and gave birth to the field of ecological economics where growth is the central focus. The Club of Rome report put in place the notion of renewable and non-renewable ‘stocks’ and ‘flows’ of natural resources. And these concepts set the stage for what we’ll look at in the next chapter.
What are the limits of our energy and raw materials? Can efficiency, producing more with less, solve our problems?
1 Darwin’s original title was: On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life.
2 Herman Daly, Beyond growth: the economics of sustainable development, Beacon Press, 1996.
3, 4 Cited in Bill McKibbon, Deep Economy, Holt, 2008.
5 Brian Milner, ‘Global outlook turns darker’, The Globe and Mail, 9 Oct 2012.
6 Suzanne Daly, ‘Spain Recoils as Its Hungry Forage Trash Bins for a Next Meal’, New York Times, 24 Sept 2012.
7 Earth Policy Institute, www.earth-policy.org/data_highlights/2011/highlights18
8 Growth isn’t possible, New Economics Foundation, 2010.
9, 10 John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy, Book 4, 1848.
11 Frederick Soddy, Wealth, Virtual Wealth and Debt: The Solution of the Economic Paradox, Dutton, 1926.
12 Robert Skidelsky, John Maynard Keynes, 1883-1946: Economist, Philosopher, Statesman, Penguin, 2005.
13 Cited in Christian Kerschner, ‘Economic de-growth vs steady-state economy’, Journal of Cleaner Production 18, 2010.
14 Peter A Victor, Managing Without Growth, Edward Elgar, 2008.
15 Thomas L Friedman, ‘The Inflection Is Near?’, New York Times, 7 Mar 2009.
EF Schumacher laid out the idea of the Earth’s ‘natural capital’ on which humanity depends. But those resources are being consumed faster with every passing year – and technological improvements and efficiency savings are utterly unable to keep pace. The Earth’s sinks are now overflowing – and we are starting to pay a heavy price.
‘The idea of unlimited growth… needs to be seriously questioned on at least two counts: the availability of basic resources and… the capacity of the environment to cope with the degree of interference implied.’
EF Schumacher
A year after The Limits to Growth appeared, a soft-spoken ex-economist from the British Coal Board, EF Schumacher released a slim volume of essays with a catchy title: Small is Beautiful: economics as if people mattered. The timing was right. The global economy was reeling in the wake of the 1973 OPEC ‘oil crisis’. Oil-producing Arab nations had suddenly cut supply and jacked up the price of crude in retaliation for US support of Israel during the Yom Kippur War. Global commodity prices surged in tandem with oil. And three years earlier, in April 1970, the first Earth Day brought 20 million Americans to the streets. The environment was becoming a matter of growing public concern.
Schumacher’s work was received as a blast of common sense, a lucid critique of Western economics that brought things sharply into focus. He wrote with passion and clarity about the environmental effects of economic growth, suggesting an alternative to the neoclassical paradigm grounded in what he called ‘Buddhist Economics’. By that he meant an economics of consumption based on ‘sufficiency’, opportunities for people to participate in ‘useful and fulfilling work’ (which he called ‘Right Livelihood’ based on one of the requirements of Buddha’s Noble Eightfold Path) and an engaged, active community marked by peace and co-operation. He called for human-scale, decentralized and ‘appropriate technologies’ as an alternative to a rapacious, dangerous and unjust global system. ‘Ever-bigger machines, entailing ever-bigger concentrations of economic power and exerting ever-greater violence against the environment, do not represent progress: they are the denial of wisdom.’1
As Schumacher saw it, the human economic system must operate within, and be subject to, the constraints of the natural world. For him, this was the major failing of mainstream economics. It was in the end, he thought, a reflection of both human arrogance and human ignorance. ‘Modern man [sic] does not experience himself as part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that if he won the battle he would find himself on the losing side.’
Schumacher was the first popular writer to introduce the concept of ‘natural capital’ to a wider audience. This was a kind of analytic ju-jitsu in which he used the language of economics to illustrate his core idea of the environmental limits to growth. In ‘natural capital’ he included all renewable and non-renewable resources, as well as all ecosystem services and systems – from the pollination of crops through the decomposition of wastes to the regulation of the global climate. Schumacher acknowledged the role of science and technology in creating human-made, ‘sophisticated capital equipment’ but noted that this is a small part of the overall capital on which we depend.
‘Far larger is the capital provided by nature and not by man – and we do not even recognize it as such. This larger part is now being used up at an alarming rate and that is why it is an absurd and suicidal error to believe, and act on the belief, that the problem of production has been solved… The modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected… It lives on irreplaceable capital, which it treats as income.’
Since Schumacher first popularized the term, ecologists have embraced it, dividing the Earth’s natural capital into three broad categories, all of which are critical to maintaining growth.
Sources
The first and most obvious category of ‘sources’ includes energy and the basic raw materials that are harvested from the planet and fed into the industrial machine. Energy, specifically oil, is the lifeblood of modern economies. Around 90 per cent of our energy comes from fossil fuels – coal, oil and natural gas.
Oil is number one, accounting for 35 per cent of the world’s primary energy consumption.2 Two-thirds of it goes towards transport – powering our trains, airplanes, cars, trucks, ocean freighters, speedboats and snowmobiles. Oil is also at the heart of modern industry, providing the energy and chemical feed stocks to churn out endless consumer goods, electronics, pharmaceuticals, construction materials, machine tools, scientific equipment, chemicals, clothing and myriad other items that mesh into the seamless system of production that now straddles the globe. Perhaps more vitally, petroleum is the energy source that powers modern agriculture. Oil provides chemical fertilizers, pesticides and herbicides while
