Sigh….economic growth and physical resources again at The Guardian

Might as well repeat the comment I left there:

Umm, as a scientist, isn\’t it sorta incumbent upon you to actually know what you\’re talking about?

\”The core problem is that the current modus operandi of global society is the production of goods and services sold for profit, with these profits subsequently reinvested in further production. Such limitless expansion, on a planet of finite material that can be transformed into usable resources, alongside limits to the processing of waste materials, is clearly impossible in the long term.\”

You\’ve entirely missed what we measure when we talk about economic growth (GDP for example) and what it means to make a profit. Neither of these things *necessarily* have anything to do with the physical limits of the world.

Both of them are about the creation of value. Value as perceived by the human beings doing the valuing. Yes, we might all think that sending a virtual red rose over Facebook is silly but those sending them (and presumably to some extent those receiving them) do value them. And that value is what we measure when we talk about GDP and it is the creation of that value that allows people to make profits.

There is absolutely nothing at all in the capitalist system, the free market one (these are two different things please note), the pursuit of profits or even continued economic growth that requires either the use of more limited physical resources or even the use of any non-renewable resource.

Indeed, technological advance and the profits and growth that come from it often mean a reduction in the use of those physical resources. Take the example of tantalum (some of which comes from that coltan which so excites people about the Congo….although only a very minor amount). Around 2000, 2001, there was a huge boom in the tantalum price as mobile phones really started to take off. The tantalum is necessary to make the capacitors….although there are substitutes like aluminium capacitors….one of the reasons the first phones were bricks is that Al capacitors take up a lot more room than Ta ones.

So what happened? Did we continue ripping up yet more parts of the earth to find the Ta to make more capcitors?

No, we didn\’t actually. Ta demand *fell* even as mobile phones went from hundreds of millions to billions around the world. Why? Because some bright people made a profit (how capitalist!) by working out how to add value (economic growth!) by miniaturising Ta capacitors. Instead of a gramme or two per capacitor we now use milligrammes of Ta per capacitor.

And this is both economic growth and profit achieved by *reducing* the scarce physical resources used.

Similarly, we get ever more efficient in our use of energy. By something like 1-2% each and every year. The amount of energy required to produce one unit of GDP (which, remember, is the value we add, not the resources we consume) declines by 1-2% each and every year. Has been for a century or more now.

Let us imagine the Green wet dream. All energy used is renewable, all physical resources are recycled. We would still have economic growth as people would still find new and interesting ways to add value to that energy and those resources which we do have. And there would still be profits for those who worked out those new and interesting ways.

In short, the physical world is not the constraint (it is a possible constraint, sure, but it is not *the* constraint) upon either profits or economic growth because neither profits nor economic growth depend upon the consumption of resources. They are dependent upon the addition and creation of value which is something quite divorced from the necessity of increased resource consumption.

I realise that I\’m just one of the plebs down here in the comments section but even a cat may look at a King. Could I suggest that as a Royal Society research fellow it is your duty, as a scientist, to go talk to some economists, you know, the experts in this subject, about your assumptions about matters economic?

So that, you know, you don\’t start making incorrect assumptions about the subject upon which to build towers of nonsense upon stilts?

6 thoughts on “Sigh….economic growth and physical resources again at The Guardian”

  1. Hardly the most opportune time to cobble together this outlandish argument.The Deepwater Horizon disaster and the push to dig up oil-tar sands in Alberta show the search for energy taking ever more stupid risks.

  2. What, DBC, there’s never been an oil leak before? And what are the ‘stupid risks’ attached to digging up oil tar sands? The risk of prosperity? Sadly, you’ll probably say ‘yes’ to that.

  3. When the scientists have consulted the economists then the economists might as well consult the tulips in my front garden for all the use the utterly discredited witch doctory has been.
    In this case it works for virtual roses, less well for cars , houses ,food and realtively minor things of that nature
    It may well be thatthr right wall is furtehr off than greenies pretend but it does exist . If “progress” ,stopped or went into reverse it wouldnot be the first time

  4. There’s an organisation called Tar Sands Watch, or some such, that records the dangers (and expense )of oil extraction from sand ,basically open-cast mining. It’s not me who’s saying that deep sea drilling is risky but worth doing a long way down ,risks increasing as easily won deposits are exhausted.Its Mr Worstall who says this can’t happen because” we get ever more efficient in our use of energy”.We would n’t be in the present dodgy situation if efficiencies in energy use were running ahead of oil depletion as he recklessly claims.They’re not;they’re lagging behind.
    BTW what happened to artificial oil substitutes?
    The Nazis were relying on them at the end of the war when cut off from orthodox drilling sites.

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