How Our Growth-Hungry Economy Has Devastated the Planet -- And How We Can Change Course
Stay up to date with the latest headlines via email.
The following is an excerpt from Enough is Enough: Building a Sustainable Economy in a World of Finite Resources by Rob Dietz and Dan O'Neill (Berrett-Koehler, 2013).
To appreciate why an economy based on enough is worth striving for, it is useful to examine the failings of an economy that forever chases more. It’s no secret that the dominant economic philosophy of modernity is more—more people and more production, more money and more consumption. Employees try to earn more income, business managers try to report more revenue on the balance sheet, and politicians try to ensure that the economy churns out more goods and services. On the surface, more seems like a good idea. For an employee, more money can mean financial security; for a business manager, more revenue can result in a promotion; and for a politician, more national income can generate votes in the next election. But if you dig beneath the surface, you begin to uncover the fatal flaws of more.
The main problem with pursuing never-ending growth stems from the fact that the economy is a subsystem of the biosphere. All of the inputs to the economy come from the environment, and all of the wastes produced by it return to the environment. As the economy expands, it consumes more materials and energy, and emits more wastes. But since we live on a finite planet, this process can’t go on forever. Like an inner tube inside a tire, the subsystem can only grow so large compared to the system that contains it.
The size of the economy is typically measured using gross domestic product (GDP). GDP is the total amount of money spent on all final goods and services produced within a country over the course of a year. Since one person’s spending is another person’s income, GDP is also the total income of everyone in the country. GDP functions as an indicator of the overall level of economic activity—of money changing hands. Economic growth, as reported in the media at least, refers to GDP growth, which is equivalent to an increase in the amount of money changing hands.
A helpful place to turn for a long-term perspective on GDP growth is the work of economic historian Angus Maddison. During his distinguished career, Maddison compiled a remarkable data series on population and GDP starting in the year 1 c.e. and running to 2008.
For most of human history, the size of the economy was small compared to the size of the biosphere. But over the last hundred years or so, this balance has changed remarkably owing to the increase in the number of people in the world and the growth in each person’s consumption of goods and services.
Between 1900 and 2008, world population increased from 1.5 billion to 6.8 billion people—more than a factor-of-four increase. At the same time, GDP per capita increased from $1,260 to $7,600—a factor-of-six increase. The result is that world GDP increased by an astounding factor of more than twenty-five over the last century, from about $2 trillion to $51 trillion (and this is after adjusting for inflation).
On its own, an increase in GDP would not be a problem, except that economic activity is tied very closely to energy and resource use. As GDP increases, the economy requires more energy and resources, and produces more wastes. While Maddison’s work provides a picture of the phenomenal growth of GDP, the work of ecological economists provides a picture of the growth in material and energy use that has accompanied it. As a result of GDP growth, humanity now uses eleven times as much energy, and eight times the weight of material resources every year as it did only a century ago. And most of this increase has occurred in the last fifty years.