Imagine Jean-Jacques Rousseau, Thomas Malthus, Karl Marx and Saddam Hussein were meeting somewhere in the afterlife, deciding to write a joint policy paper. Difficult to imagine? Not at all. The result would probably look a lot like ‘Enough is enough’, the report which came out of the latest Steady State Economy Conference.
The Steady State Economy Conference is an occasion where well-to-do professionals get together to talk about why prosperity is not good for other people. Popular prosperity, it is argued, turns people into mindless, self-obsessed, neurotic shopaholics. People may not realise it, but they are deeply unhappy, desperately in need of wise experts to take them by their hands and lead them out of their mental misery by restricting their material consumption. This is, at the same time, the only way to stop people from stripping bare the planet. Among the attendants are luminaries from the Optimum Population Trust, the New Economics Foundation and the Equality Trust.
Humanity’s mortal sin, in this worldview, is economic growth. Growth upsets the fragile balance of nature and traditional communities. It needs to be eradicated root and branch, by creating a totally different type of economy – you guessed it: the Steady State Economy.
The combination of social pessimism and a fixation on alleged natural limits is hardly new, and its predictive record has thus far been rock bottom. In the late 18th century, Thomas Malthus predicted overpopulation and starvation. Yet at the onset of World War I, the population of Western Europe was twice as large and three times as rich (in per capita terms) as a century earlier. In the late 1960s, Paul Ehrlich stepped into Malthus’s footsteps, prophesying decades of mass starvation in the Third World. Yet the following decades witnessed the rise of the Asian Tigers. In the 1970s, the Club of Rome predicted the world would run out of most vital resources by 2000. When that date arrived, most resources were cheaper in real terms than ever.
For doomsayers, the world’s stubborn refusal to perish has never posed a problem. Whenever the apocalypse fails to happen, they simply push the expiry date a bit further into the future and repeat their litany of sin and chastisement. As Daniel Ben-Ami explains in ‘Ferraris for all’, ‘one of the characteristic features of environmentalism is that it is remarkably impervious to factual refutation’ (p. 123).
The reason why doomsday environmentalism consistently gets its predictions wrong is its false view of human nature. The proponents of Steady State Economics think of people as of a swarm of locusts: left to themselves, they will blindly devour their own livestock. But this interpretation is misleading. Locusts cannot generate scarcity signals. We can: they’re called market prices. Locusts cannot increase their ‘efficiency’ in the use of resources. We can, and we do it all the time. Locusts cannot deliberately search for substitutes, let alone create one. We can, and we even shape what counts as a ‘resource’ in the first place. In pre-industrial times, oil was not a resource, but merely a black liquid.
Bjørn Lomborg once likened the logic of resource depletion to somebody who looks into a fridge and then concludes: there is only food for three days in it, so after that, the fridge owner will starve. There are no natural limits to growth. There are people who do not like growth because they do not approve of the way we choose to spend our money.
@ ghassan karam - the author is accurate in stating 'there are no natural limits to growth'. While technically the laws of physics suggest eventual limits, these lie so far in the future that they are irrelevant to economic discussion. As long as humans are free to innovate and trade within a market system based on private property, there is no reason why improvements in productivity cannot continue in the very long term.
@ Dave Gardner - while fossil fuels clearly play a pivotal economic role today, there is no reason why they can't be substituted if they become scarce and no reason any resulting rises in input costs couldn't be compensated by productivity growth, which is immense in the long-term in unhampered market economies.
@ Nick Watts - if there are shortages of oil then the price will rise and it will become profitable to exploit alternative sources. We may already be seeing this as the huge reserves of gas and oil from the the oil shales and tar sands start to come on tap. These sources cost more to extract but the extra costs can be absorbed in a dynamic market economy with rapid productivity gains elsewhere. Eventually more renewable sources of energy may become economic (remember that total human energy consumption is absolutely tiny compared with the amount of solar energy reaching Earth.)
While you're correct about the large fossil fuel input to agriculture, the price mechanism will also work here to substitute alternatives. Only a small fraction of the Earth's land area is cultivated and this could be increased dramatically, and (you mention meat and dairy) price signals could encourage farmers to plough up pastureland to increase overall calorific output. However, there is a problem - the high level of state control over agriculture (e.g. the CAP) which would hamper such an adjustment process.
It's possible that record food prices have more to do with central banks printing money than concerns over energy supplies.
Kristian Niemietz has responded to criticisms of this original post in a new blog piece on steady state economics: http://www.iea.org.uk/blog/malthus-is-dead-get-over-it
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