It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Wednesday, August 31, 2011

The Alleged Non-Limits to Growth

We presume as given that the energy consumption of the world must reach a finite limit, and consider whether the economy can maintain the imperative for growth. Prominent blogger Matt Yglesias comes up with some feeble handwaving that says it can. Yglesias is wrong.

Physics Prof Tom Murphy puts the endless growth conundrum through its paces and ends up in familiar places.

I'd like to quote this part. (If you don't fully understand it, go read it in context. In fact, go read it anyway. Murphy has had the patience and courage to work through several aspects fo the problem.)
The important result is that trying to maintain a growth economy in a world of tapering raw energy growth (perhaps accompanied by leveling population) and diminishing gains from efficiency improvements would require the “other” category of activity to eventually dominate the economy. This would mean that an increasingly small fraction of economic activity would depend heavily on energy, so that food production, manufacturing, transportation, etc. would be relegated to economic insignificance. Activities like selling and buying existing houses, financial transactions, innovations (including new ways to move money around), fashion, and psychotherapy will be effectively all that’s left. Consequently, the price of food, energy, and manufacturing would drop to negligible levels relative to the fluffy stuff. And is this realistic—that a vital resource at its physical limit gets arbitrarily cheap? Bizarre.

This scenario has many problems. For instance, if food production shrinks to 1% of our economy, while staying at a comparable absolute scale as it is today (we must eat, after all), then food is effectively very cheap relative to the paychecks that let us enjoy the fruits of the broader economy. This would mean that farmers’ wages would sink far lower than they are today relative to other members of society, so they could not enjoy the innovations and improvements the rest of us can pay for. Subsidies, donations, or any other mechanism to compensate farmers more handsomely would simply undercut the “other” economy, preventing it from swelling to arbitrary size—and thus limiting growth.

Another way to put it is that since we all must eat, and a certain, finite fraction of our population must be engaged in the production of food, the price of food cannot sink to arbitrarily low levels. The economy is rooted in a physical world that has historically been joined at the hip to energy use (through food production, manufacturing, transport of goods in the global economy). It is fantastical to think that an economy can unmoor itself from its physical underpinnings and become dominated by activities unrelated to energy, food, and manufacturing constraints.
I think we are already facing the problems of the real economy (especially food and water) becoming too small a fraction of the symbolic economy. I think Murphy is making the case that this can't possibly work.

How it will fail remains to be seen. An example would be some people starving while farmland is used to make gasoline.

Less obviously, emissions leading to massive climate change might thoroughly dominate over sustainability. That is, so much more "wealth" is tied up in energy than in the environment that we are willing to sacrifice the environment to such an extent that it will actually start to kill us.

Now consider the fact the speculative economy (banking and finance) is also many time larger than the symbolic economy. That is, banking and finance exchanges dominate symbolic exchanges (movies, real estate, fashion, personal computing gadgets) which in turn dominate over food and water. At some point, the decisions of the marketplace become stupid. The food goes away, driving the prices up, pulling the energy-intensive portion of the economy back into play.

What Murphy adds to the analysis is to close the loop. This is not just possible, somethinbg to worry about. On the presumption that the growth imperative can be maintained, it is inevitable, as the growth imperative keeps driving monetary value toward items disconnected from energy.

The real questions are first whether the time of the transition is already at hand, and second, whether we will have the social capacity to transition smoothly to non-growth, or whether disaster will force it upon us.

Endless growth supporting an endless debt-based economy cannot work.

Update: Again I remind everybody of the Ms Fnd n a Lbry

Update: Via Ron Broberg, this graphic from an article (in English) on der Spiegel


David B. Benson said...

In some idealized sense, growth can continue forever:
but after some time it becomes very difficult to distinguish from status.

James Annan said...

How does this "certain, finite fraction" engaged in food production look like in the UK say over the last 3 centuries? Anyone hazard a guess? Such claims don't pass the sniff test I'm afraid.

Andy S said...

If the relative share of the economy claimed by food shrinks to 1% why would that mean that farmers will become relatively poorer? Have farmers become poorer in the past as the rest of the economy grew faster than agriculture?

If farmers can earn more money doing something else, they will do it (and have done it in the recent past as peasants move to the city). Food then becomes more scarce, prices rise and the wages of remaining farmers will rise too.

In any growing economy, providers of essential goods do not become poorer. Quite the opposite.

Doug said...

When we can have things such as recessions that are entirely disconnected from the physical world (what was physically different in our world, 2007 vs. 2008?) it seems as though the relationship of the symbolic to the real economy is obviously far out of whack, already.

Disconnected from the world outside of the space between our ears, economic activity itself becomes a faddish theater, subject to purely psychological vagaries, wildly unstable and thus quite unreliable.

"Information economy," indeed. Harrumph.

Michael Tobis said...

Doug, that has been happening since there was money. See "tulip mania".

Andy S; yes, farmers are definitely relatively poorer, more so in high income countries where they are not heavily subsidized.

In America, small farmers are being chased off the land for industrialized farms. This has its benefits in efficiency of course. But driving the back roads on the high plains or the prairies in the States is to drive through, on the whole, various levels of poverty, especially in areas where there is no other economic activity to supplement agriculture.

Michael Tobis said...
This comment has been removed by the author.
Michael Tobis said...

James, please elaborate. I don't follow what you are saying.

The idea is that the fraction of economic activity for food production cannot go too close to zero or no food will be produced. I don't think 1711 has much to tell us about that.

Michael Tobis said...

Ah, I think you are saying that the fraction of the population involved in producing food can become negligible. OK, fair enough. But the amount of resources used to produce food cannot become so small that food producers, whoever or whatever they are, are indifferent to whether food is produced.

We are assuming as a reductio ad absurdum an indefinite continuation of the current, growth-based economic order. On that assumption, whether the number of people involved becomes negligible or not is not the issue. The issue is whether the resources are allocated. If the reward for an amusement park or a golf course exceeds the reward for a farm, the amusement will be built and the farm taken out of production.

The reductio tells us that the value of food cannot become negligible because the resources needed to produce it are always part of the real, physical economy, and not the symbolic level or the financial level perched tenuously in an inverted pyramid above it.

David B. Benson said...

This is one of the best wheat (soft white winter wheat, i.e., oriental noodle wheat mostly) growing areas in the world, if not the best. There is quite a bit of rural 'poorness', if not actual poverty.

Doug said...

BTW, I forgot to thank MT for highlighting Murphy's treatment, which is a refreshingly novel approach, to these eyes anyway.

Call me naive, but I've long thought that punishment dealt out to publicly traded firms for not steadily maintaining geometric growth is extraordinarily destructive to our well being. Our insistence on not only achieving geometric growth but sharpening the curve of our growth rate year after year as reflected in quarterly percentages seems to me a key factor in ensuring that our industrial activities resemble extraction operations as opposed to husbandry.

This boundless approach seems like it must surely be a transient phenomenon, possible only while we're filling the planet; our inculcation has been formed in conditions of relative emptiness. That's a topic that's been under discussion here for some time; I'm only just catching up. It is pleasing to see that there's a broad range of discussion of this topic happening now at various venues. Some kind of broad consciousness-raising in process, maybe?

Michael Tobis said...

Doug, not broad enough as yet I am afraid, but one has to start somewhere. Thanks for your kind words.

Belette said...

> But driving the back roads on the high plains or the prairies in the States is to drive through, on the whole, various levels of poverty, especially in areas where there is no other economic activity to supplement agriculture.

Well yes. There are no jobs there. If you choose to live there its either because you're rich (and so can live where you like) or poor (because you have no job).

There are lots of parts of the world (UK quite obviously) where the housing, and where people live, makes no sense at all; there is far too much hang-over from the days of living on the land.

We're wasting resources (because living out in villages and commuting in to work is so inefficient) that we can't really afford (especially by your logic). And yet you seem to be hankering back to those days.

Depopulate the plains.

James Annan said...


Well tell us what that finite lower bound is then.

I haven't even got to the follow-up of asking why this actually means growth has to stop, nor the second follow-up of why this hypothetical limit is a pressing enough issue that it motivates changing our economic approach right now. If your main goal is actually the latter, there may be better arguments for it.

Pangolin said...

It's interesting to note that the average age of farmers in the grain belt is around 57. There is especially a noted difficulty in transferring farms from older farmers to younger farmers as the marginal rewards for production do not allow enough income to purchase land and even used machinery and seed.

I know young adults who literally travel from farm to farm working for little or nothing simply for the opportunity to "experience" farming in the way it is culturally understood.

Today's farm system has older adults owning farms without sufficient income to support a second, inheriting generation, on the same farm. The majority of labor comes from itinerant farm labor that cannot possibly earn enough to purchase adequate farmland for themselves.

It appears the condition of a declining agricultural economy resulting in an unsustainable farm sector is being met.

Andy S said...

Murphy imagines a world where food production is less than 1% of the economy. He needn't imagine any such thing, since that's already the case for the USA and counties like Germany and Britain. (Not all agricultural output is food, of course.)

I don't have the numbers that show whether or not farmers have become relatively poorer, compared to, say, teachers and lawyers, as farming declined in relative share of GDP in the twentieth century in advanced economies. In Europe and Canada my impression is that farmers have not been significantly disadvantaged relative to other sectors of society. In absolute terms, however, farmers have certainly become much richer in prosperous countries.

Rural poverty is a persistent problem everywhere. But it's worse in those countries where agriculture is a large part of national GDP.

Michael Tobis said...

James, I already stipulated that the present argument does not answer whether some transition is urgent; it simply indicates that it will eventually be necessary.

I think the stronger point is that it doesn't really constitute a limit to growth of a similar system, where necessities are protected by fiat while "growth" takes place in a field which is harmless.

In such a model, economics gradually becomes a game, where points are exchanged for points, and nothing of consequence is actually created by the dominant part of the economic system.

Perhaps the products of substance would have to be created by fiat, and we would essentially have a soviet system for necessities and an American system for frivolous luxuries. Of course, the deep problems with the soviet system at that point become serious ones. Still, the illusion of growth persists.

Given that life for the bulk of people in America has not changed dramatically over my lifetime despite all the "growth", except insofar as they spend more time working and more time driving and more energy feeding their driving habit and their cavernous houses, and less time having fun, this arguably is the track we are on.

That is not the track that defenders of the status quo want or claim to be advancing. But once we understand that the dematerialized economy is dominating the real economy, this sort of contradiction is what we are facing.

This is what we need to get a grip on. There are many ways of looking at it. The question remains "what is the measured by quantity that is demanded to be growing?" and the answer remains unclear and dubiously connected to well-being.

Aaron said...

First world agriculture has become a large volume, low margin, extractive industry. It is subsidized by cheap fossil energy. And, high value by-products and residuals (manure) are discarded. Manure contains large amounts of valuable nitrates, nutrients, and energy, and modern farming treats it as waste. This waste makes modern farming unsustainable.

The industry is fragile because it depends on a stable climate. Industrial agriculture depends on single cultivars of single crops. We no longer have genetic diversity in our primary crops, and we have stopped growing backup crops that might tide us over if a particular year was too cold or too hot or too wet or too dry or too windy for the primary crop.

The industry is fragile because it depends on large inputs of cheap oil and petrochemicals. It depends on large inputs of synthetic nitrates, and trace nutrients. It depends on large inputs of pesticides. It depends on large amounts of specialized technical machinery. It depends on the production of large quantities of uniform seed. Disruption of the systems that produce these inputs would be catastrophic. Such disruption could come from weather (i.e., crop failure) or just the stupidity of people (or their elected policy makers) that do not understand agricultural economics.

The industry is fragile because it depends on farming skills that are becoming rarer. Farmers that leave farming lose those skills. Simply paying higher wages does not bring those skills back. Converting land to housing, means that land is no longer available for food production. Bringing farmers and land back into farm production entails huge “transaction costs”.

The industry is fragile because it depends on seasonal, low-paid labor for a variety of tasks. Food production should be a serious consideration as we develop immigration policy.

More than half of our pesticide and nutrient production goes to growing cotton. Thus, if we are hungry, we are likely to also be naked.

Current industrial farming is a limit to growth. More than that, it is non-sustainable and sets a limit for our current way of life. Food and fiber policy must be the keystone in any effective plan to address AGW. This year, India is exporting wheat. That means India is stepping away from small farms that recycle manure toward industrial agriculture.

Paul Daniel Ash said...

Forgive me, mt... but Happy Birthday!

Gravityloss said...

You finally linked to him. :)

That was his worst point in my view.
For example, to oversimplify (this is certainly an area where I have little direct knowledge), I've heard that in the EU the farmers are paid just if they farm, and not according to how much they produce.
So we are almost already past that point.

Of course, if you'd drop the farming subsidies, price increases - a larger portion would go directly to food (more the poorer you are) and tax drops (more the richer you are).

Or rather there wouldn't be much farming in Finland.


I think the limited energy and limited efficiency were his strongest points. I haven't heard the points about the fundamentally very limited gains that can be made in energy efficiency before. I really hadn't thought about that at such analytical level. It's important and worth spreading.

The solutions to those problems are many but they mainly fall into the category of using your brains.

Ie not living in a huge mansion in the car suburbs that's cooled in the day and heated in the night and staying in traffic jams for an hour every day. A more efficient internal combustion engine doesn't help your energy or environmental problems much in this case. The in-box solutions will be limited. (unless there is a sudden new nice scalable energy source.) Instead make city centers and dense suburbs safe, interesting and livable. Cultural changes.

It's how you spend your time that determines your life quality, not the size of your house. You can meet friends and do interesting things in cities. I know places like Berlin or Helsinki at least are nice to stroll around whatever the time of day. Maybe New Orleans too?

One possibility is even moving to some more temperate areas if you can't take the climate without using a huge amount of energy.

If you want to have a big house with little insulation, small heating and cooling bills and still nice inside climate, the Mediterranean is probably pretty nice but perhaps a bit too hot. I don't know where in Europe for example people could live without air conditioning anymore. We just had a Finnish summer that was a record, 2 C hotter than the long term average. The stores ran out of air conditioners.

Don't know what's considered the best climate in USA. Maybe Florida?

Gravityloss said...

Gah, missing verbs and everything but I guess you get the point. Shows that I'm in a flu.

Nick Barnes said...

I would suggest that, in the absence of strong AI[*], at least one human being will always be involved in food production. So that's at least 1e-10 of the global population.

[*]in the presence of strong AI, all bets about everything, including economics, are off. I'm prepared to debate this separately, but basically if you disagree with me on it then you aren't thinking hard enough about the problem.

Gravityloss said...

Nick, but can she work there part time?

Nick Barnes said...

Most of the population of the UK lives without air conditioning.

Gravityloss said...

Nick, yes you have a point. After a certain level, adding just more energy doesn't free up people to other tasks, you need AI.

At some point of course you could only have one human with a stupendous economy per capita and everybody else is robots. (Assuming per capita does not include AI in the denominator.)

Did you read about the news where Flextronics or some such is starting to replace workers with ABB robots. They don't do those pesky suicides.

Marion Delgado said...

Whenever anyone says this is a "watermelon" perspective, or especially "leftist," it would be worthwhile to remind them that most Leninists/Stalinists/Maoists, etc. believed just as fervently in "no limits to growth." Indeed, that's one of many things that prompted "Green" politics as an alternative to both capitalist and Marxist-Leninist permanent growth fantasy politics. It came out of, e.g., the "Small is Beautiful" paradigm of people like E. F. Shumacher, Gandhi, and Thoreau.

It's only later that corporatist/ capitalist/ Christianist/ etc. politics became completely identified with cornucopianism (as the established pro-growth state socialisms declined). Conservatives like Teddy Roosevelt understood this point more than 100 years ago.

Michael Tobis said...

The most comfortable place in America, leaving aside Hawaii, is unquestionably southern California, which is already heavily overpopulated and unsustainable. These places need the least interior climate control, though they are expensive to provide with water and must be robust to earthquakes and fires.

A great deal changes if we think on a planetary skill or we attach ourselves to nation-states.

Since we are considering the sustainability of the legal/economic status quo, I think nation-states can be assumed, so massive migrations are limited, though a few of the largest nations, and possibly Europe if it holds together, span enough zones that it is to their advantage.

Michael Tobis said...

PDA, thanks!

Michael Tobis said...

Marion, I find that interesting. Can you say more about Th. Roosevelt's views?

Ron Broberg said...

I think we are already facing the problems of the real economy (especially food and water) becoming too small a fraction of the symbolic economy

Graphical peak at 'goods and services' -v- financial markets. Now imagine one more level which distinguishes goods from services.

Ron Broberg said...

Hmmm ... missing link
Ritholz: Spiegel: The Destructive Power of the Financial Markets

Michael Tobis said...

The infographic understates the disparity as circles. The shapes should be taken as spheres!

Marion Delgado said...

Michael: he was a conservationist of great repute, as well as a trust-buster. 2 kinds of growth limitation. And part of his support for imperialism, even, was a response to the limits of markets (if you can keep growing your market, a lot of its problems can be swept under the rug, year after year, until you butt heads with someone else doing the same thing).

Also: when I protest against the unfair profits of unscrupulous and conscienceless men, or against the greedy exploitation of the helpless by the beneficiaries of privilege in all these case I am not only fighting for the weak, I am also fighting for the strong. The sons of all of us will pay in the future if we of the present do not do justice in the present.


Distinguished scholarly work on Theodore Roosevelt has concluded that his conservatism, moralism, and keen sense of balance-of-power international politics are the keys to understanding this highly popular and influential president. On the centennial of his birth, he was celebrated with a Time magazine cover story in March 1958, at the nadir of the Cold War. Time applauded his use of “a new kind of power – deterrence” to “promote the U.S. self-interest in …. world order.” One biographer notes “that a deep-seated conservatism formed his basic political outlook.” Another concludes that “he believed in change, but gradual change; change within established institutions.”

David B. Benson said...

Well I know where the very place in the USA to live is, but I'm not telling.

David B. Benson said...

There is a professor in the ag school here working seriously on introducing AI (robots) in apple orchardry. The reason he gives is the inability of the orchardists to be able to hire competent workers. I supposee they are also limited in the wages they can pay for the seasonal work, but the stated problem is the lack of capable personnel. (This did not occur in the past when the US had a decent guest workers program.)

Paul said...

I can't resist passing this on:

Paul Middents

Gravityloss said...

David, interesting.
Cue Spinning Jenny, Luddites and the Grapes of Wrath.

Don't those areas in western countries use foreign workers from poorer countries since locals don't do that anymore?

Mexicans in USA and North Africans in Southern Europe. Illegal most of course. Everybody loves cheap fruit.

Hell, even Finland's most foreigner rich county is Närpiö (Närpes in its native Swedish) which has a huge amount of tomato greenhouses (can you imagine them blazing away in the dark winter...) and tomato pickers from Southeast Asia. I was there actually two weeks ago. Everything looked nice and clean. Employment rate is very high and there's very little crime. Government subsidies are a strange thing. Because of historical power balance reasons, Swedish speaking areas receive quite a lot of them, or so I've heard reputable people say.

Dan Olner said...

Little example via Monbiot: the UK government nicely and clearly stating their impeccable logic in the new planning policy framework. The double-think is amazing: this is pure laissez faire as far as I can tell. And `development means growth?' Uh huh. Not sure a single plant biologist or ecologist would agree. To quote from the original (PDF) -

"The purpose of planning is to help achieve sustainable development.

"Sustainable means ensuring that better lives for ourselves don’t mean worse lives for future generations.

"Development means growth. We must accommodate the new ways by which we will earn our living in a competitive world. // Our lives, and the places in which we live them, can be better, but they will certainly be worse if things stagnate."

And from p.3: "The Government is committed to ensuring that the planning system does everything it can to support sustainable economic growth. A positive planning system is essential because, without growth, a sustainable future cannot be achieved."

Hank Roberts said...

P.S., if you haven't read this, read at least the bits that Google Books has online, esp. about misplaced concreteness and the notion that debt is often created that supposedly obliges the world to produce wealth faster than actually happens -- so we get stripping of the natural world.

Sorry for the long link.

Hank Roberts said...

P.S., somewhere in that book on pages not available online, they quote from this piece (also not available online) to good effect:

Are financial markets sustainable?
Shah, A. ; Haiss, U.

It's the sort of explanation of financial markets that makes ecologists weep and tear their hair.