Could someone please buy George Monbiot a book of economics?

Have to be a pretty simple one of course, Janet and John do Econ 101 perhaps.

We will lurch from crisis to existential crisis unless we address the underlying cause: perpetual growth cannot be accommodated on a finite planet.

Perpetual physical growth cannot be accomodated in a finite physical system. Yes, this is entirely true.

But to decide whether perpetual economic growth can be accomodated in a finite physical system we need to define what are the boundaries to economic growth: which in turn means defining what is economic growth.

If economic growth depends (no, not involves, but depends) upon the consumption of physical resources then yes, of course, perpetual growth cannot be accomodated in a finite physical system.

So, does economic growth (or even economic output) depend upon the consumption of those physical resources?

No, it doesn\’t. For the way we define economic output is as value added. This is what that mysterious GDP figure measures. Not tonnage used, tonnage produced, resources stripped untimely from Gaia\’s grasp, but the value added. The value that the human beings doing the consuming accord to the things they are consuming.

Now of course, some of that economic growth we measure in this manner is indeed the consumption of resources. But let us move to a Monbiot economy: one where no new resources are abstracted from Gaia at all. Everything is recycled, we use purely the stock of materials we already have above ground and only entirely renewables are used: forests that regrow, energy from Sun or tide and so on.

Is it still possible to have economic growth in such circumstances?

Given our shaved ape inquisitiveness and ingenuity, yes. For there\’s all those billions of us continually experimenting with new ways of doing things with whatever resources we have to hand. The vast majority are bad ways of course (\”bad\” here meaning do not add value), of those that are good the vast majority again have already been thought up by someone else elsewhere. But some few are both good and new ideas and it is they that drive our ability to continue to add value to our activites. And this is measured as a rise in GDP.

So, yes, even if we constrain ourselves to only using those resources we already have then perpetual growth is possible. For it is not the physical limits of the planet which limit economic growth, it is the limit of the human imagination.

And if you read through Hermann Daly\’s work (the Guru of the no growth Greens) you\’ll find that he admits this. It\’s in a rather shame faced manner, almost as a footnote so that other economists won\’t laugh him out of the room. But in reading him people like Monbiot have missed this caveat of his.

As economic growth is not defined or constrained in toto by the availability of resources, rather, by our ability to add value to them, then the constraint upon economic growth is not the resources of the physical world but of our knowledge in how to add value to them.

Thus perpetual economic growth can be accomodated on a finite planet.

2 comments on “Could someone please buy George Monbiot a book of economics?

  1. Perpetual physical growth can be achieved in a finite space.

    1 + 1/2 + 1/4 + 1/8 + 1/16 + 1/32 …. etc = 2, not infinity.

    A lilipad can keep growing for an infinite time and never hit the edge of the pond, so long as each time it grows it only dimishes the distance between the edge of its leaf and the edge of the pond by half.

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