Something which is important for Socialists to consider is whether or not the word “socialist” should be capitalised in this sentence.

The answer is that it should not.

Grammar Fascists, Unite! You have nothing to lose but the respect and patience of all those who know you!

Er, did this article just get shorter?

Paul you Capitalist pig dog.

Is it a proper noun or not? Why not? I want it to be.

I own my own modes of grammatical production and I say, capitalise Socialism.

“I quite like the idea of humanity progressively getting richer. By that I mean continuing increases in productivity being used to make and do more stuff from fewer resources.”

Get back to us when you find out that this is sustainable.

The idea that everybody in the world can live as the 20% in the West do is an illusion. Even as it stands we’re destroying the planet. Think of the result if another 10% were living as we do now, let alone the other 80%. To argue that the West must continue to grow even more is to either argue that a) consumption must continue unabated regardless of the effects, or b) it is acceptable for a smaller and smaller proportion of the earth’s inhabitands to achieve a higher and higher standard of living while a larger and larger proportion of the world’s population do not.

Is that socialism?

If you view socialism as compatible with a market economy (that allows for democratic ownership structures like co-operatives) than I don’t think you will have a problem with finding a highish growth form of socialism. Scandinavian countries are pretty good at handling that sort of balance.

Also, in a globalised economy you don’t necessarily need every country to pursue a high growth strategy all of the time. The benefits of high growth spread beyond the countries that implement high growth strategies. For example, whatever new technology gets developed in Switzerland or Singapore in the next few decades wont stay in those places. It will be available to everyone for a small cost and a small time lag.

“Get back to us when you find out that this is sustainable.”

Humanity itself is unsustainable. We specialise in doing clever unsustainable things until they stop working and then finding out even cleverer ways of doing them. We haven’t come up against any permanent limit to growth yet, and if we are clever enough, we never will.

What are “democratic workplaces”?

Who would have voted for their typewriter factory to close?

“We haven’t come up against any permanent limit to growth yet, and if we are clever enough, we never will.”

But that’s what I’m saying: we have. We are rapidly approaching a point where real consequences are going to be seen on a global scale. People have been fantasizing for years about us discovering some mystical new technology that will magically replace oil, but it’s not happening, is it?

An interesting example but one that ignores many confounding factors. Economic growth is absolutely dependent on natural resources, which are rapidly bring exhausted. Perpetual growth is not sustainable, then. Your definition of wealth is an odd one that excludes many intangible elements which are incompatible with continued growth in resource consumption, such as the aesthetic value of nature, which is likely to be greatly diminished when national parks are sold off for open cast mining, for example. I think what you are actually referring to is a decoupling of development from growth. In theory this doesn’t necessarily make anyone richer- wealth and development are two different things. In practise, if we moved to a zero growth model but maintained development then a lot of the externalities produced by the current system would have to be internalised, making everyone better off. This is, I think, a more interesting question and one that unites two eminent progressive causes: Equality and sustainability. Its also a question that is consistently misunderstood of simply ignored by progressive commentators and activists, which is odd.

@7

If they were offered work at better pay in a PC/whatever factory then everyone.

@cjcjc

“Who would have voted for their typewriter factory to close?”

No one would, obviously. Its a straw man. I assume your typewriter example refers to technological obsolence, in which case the workers would vote to diversify into other markets where there manufacturing skills could continue to be profitable. Or they could vote to retool, retrain and begin making word processors.

So kind of like it happens now…

“But that’s what I’m saying: we have. We are rapidly approaching a point where real consequences are going to be seen on a global scale. People have been fantasizing for years about us discovering some mystical new technology that will magically replace oil, but it’s not happening, is it?”

There is loads of new technologies (whether in biotech or nanotech). Oil just needs to get scarce enough to render them value for money to invest in.

Economic growth is not dependent on any single natural resource, other than human ingenuity.

@11 what would be made in the intervening period?

@14

You’re either being deliberately obtuse or stupid so I’m not going to bother answering. Try thinking for yourself.

@11,

No one would, obviously. Its a straw man. I assume your typewriter example refers to technological obsolence, in which case the workers would vote to diversify into other markets where there manufacturing skills could continue to be profitable. Or they could vote to retool, retrain and begin making word processors.

Nice to see you have total trust in the ability of those voting to make the correct decision – obviously you agree we have the correct government also!

Democracy is a way of running a county. It is not the best way to make a decision (one of its virtues for government perhaps), and would certainly not be an effective way to run a factory. Unless you have co-ops in mind, but since my father-in-law’s branch of his co-op was sold without asking him to another company, I doubt they work democratically in the way you seem to imply here.

For god sake, you anti-growthers are annoying. You are not even convincing on your own terms. I will defer to the ever excellent (and mystifyingly blogless) Luis Enrique.

people really need to separate out the idea of economic growth from that of finite resources.

for a start, even if we stop growing and start shrinking, we’d still be screwed if we had a finite resource problem, because resources are a stock and consumption a flow.

For example, say we have 100 units of finite resources left, and immediately start shrinking the economy so consumption patterns look like this:

2010: 40 units consumed
2011: 30 units; those columns in The Guardian are starting to work!
2012: 20 units; we’ve ended the “culture of consumption”!
2013: 10 units; hooray, back to the middle ages!
2014: oh rats, it’s all gone, we’re still screwed.

so if you think we have a finite resources problem, just stopping growth is no real help (it may just prolong things for a while longer).

Moreover, obviously any particular form of economic activity that is based on a finite depletable resource is not sustainable, but that doesn’t mean economic activity is unsustainable, so long as we can switch to other inputs.

In the long-run, clearly the power sources available to us which are long-run sustainable are solar, wind maybe nuclear, and in the long-run the materials available to us are synthetic materials based on plants (bioplastics, carbon fibre etc.) and recycling the finite stock of minerals on the planet (metals etc.) and with trillions of watts of solar energy hitting the planet, there’s no reason to think high levels of economic activity aren’t sustainable for the long-run.

In the meantime we need to ensure: 1. we don’t do any more irreversible damage (climate change, rainforest, coral reef etc. destruction) and 2. we don’t carry on blindly so that we’re suddenly screwed when the finite resources we have been using run out – i.e. we just have to invest in developing substitutes to make the transition painless. (and 3. we start to repair past damage would be nice).

http://liberalconspiracy.org/2010/05/19/a-campaign-to-avoid-shock-doctrine-for-the-uk/#comment-133914

@17 Branding people as “anti growthers” suggests you have no faith in the laws of thermodynamics. You’ll be interested in my link in post 9. And in this.

@16 Do you really think we live in a functioning and representative democracy? That’s pretty naive.

“Does the benefit of knowing you’re a member of an equal society outweigh the cost of simply not being as wealthy?”

This makes it sounds as if the main benefit of being a member of a more equal society is simply knowing you’re a member of such a society – as if the resultant ‘warm glow’ one would feel is a reward in itself.

But as you suggest in the previous paragraph, it has been argued that there a real benefits to living in a more equal society – ‘lower crime, happier people, less mental illness, better quality of life’ – whether or not the people living in it know or care how equal it is.

And one of the main claims made in The Spirit Level is that all rich Western countries are already past the point where growth makes any positive contribution to the health & happiness of their citizens. If that’s right, worries about trading off the benefits of increased growth against the benefits of increased equality are fundamentally misguided – only the latter benefits are real.

Incidentally, what prompted the question? Is there any evidence that more equal societies grow more slowly, over time, than less equal societies? (That seems rather unlikely when one thinks about countries like Japan, say.)

As to the excellent original post, “A Socialism in which the information and knowledge of normal people working in democratic workplaces would operate more efficiently and more equitably that modern managerial capitalism” is in my mind indistinguishable from a properly run market (allowing that democratic workplace is not a sit-down-and-vote collective of the type seemingly alluded to above, but a place where everyone has the ability to make a contribution or leave to another position).

Managerial capitalism (I always prefer to think of it as supermarket capitalism) is only efficient when you need to organise large numbers of people to produce things. With technological advances this is less necessary, and it is possible to produce things with smaller numbers. And, once information is available in a way that is not prejudicial towards large producers (through advertising, presence or ‘brand-loyalty’), the market advantage will normally be for small and flexible producers who can combine resources where necessary (here open source is an important development) against large unwieldy producers whose economies of scale will become less and less relevant.

I think that this is a place where certain positive (non-corporationist) interpretations of most political creeds will actually agree – that progress is itself the greatest equaliser. So long as we ensure we are not harming progess by holding people back from opportunity (and this involves challenging the old men with beards and the gossips and scolds, who regulate their own ‘communities’ rather than by imposing false hurdles and rules on progress), then this is a future we can all aim at. And we don’t need to call it socialism (incidentally, not a proper noun because there is no one agreed basis for the movement) or capitalism – wieredly though, the ultimate product of this would be workable Communism.

18, you haven’t addressed my point. BTW, Anti-growther was not meant to be a slur, but merely short hand for someone who wants an economy which does not grow. Oh and how is thermodynamics relevant to economics?

Oh, you talking about entropy? I’m not sure how relevant that actually is to human economics on a human or civilizational time frame.

@18,

Wierdly, I think this is a functioning democracy. I get to vote in the perscribed elections which appoint my representative, and my vote counts (at least towards the published figures). That seems to be functioning to me, and is clearly representative in that there is an MP and councillors elected who represent me and my neighbours.

Naivity would be not understanding the difference between our functioning and representative democracy and the sort of democracy you would prefer (or me – I don’t think our system is perfect by any means). It would also be assuming that any democratic gathering in the real world (as opposed to the future world with perfect information availability) will make correct economic decisions, despite the evidence of our own economic state.

I understand Luis Enrique’s argument, its textbook economics. However to argue that compound negative growth is bad (obviously) but that compound positive growth is both good and possible (at the necessary 3% required by capitalism today I assume) seems wrong.

Of course our positions are both just opinions, we’ll find out sooner or later. I’ve benefitted very well from the capitalism of the postwar era but I have strong misgivings about its 21st century incarnation.

I think we need to be smarter than we have been and the imaginary money invented by financial fantasists that got us into this pickle won’t get us out of it. The markets have failed and will do so again unless something is done to prevent them.

To add to my previous posting, those who advocate steady compound growth of 3% need to answer where the money will be invested profitably? One of the reasons we reached the crisis we are still recovering from is that capitalists had to invent imaginary money in order to be able to invest their capital. Today some people estimate the figure is $1.5 trillion needing to find somewhere to grow. At 3% compound it will be $3 trillion by 2030. The problem is not simply resources, but finding profitable investments. It seems to me that there must be a sticking point sometime.

And don’t just say that the markets will find a way. That is simply taking faith too far.

for a start, even if we stop growing and start shrinking, we’d still be screwed if we had a finite resource problem, because resources are a stock and consumption a flow.

Wrong. Resources are also flows. Some resources (e.g oil) are very slow flows, but they’re flows nonetheless. But yes, we are still screwed even if we start shrinking. The unpleasantness of this fact has no bearing on its truth.

so if you think we have a finite resources problem, just stopping growth is no real help (it may just prolong things for a while longer).

It can’t really be a problem, because if it were, that would be really bad. OK, that’s a really convincing line of argument you’ve got there…

Moreover, obviously any particular form of economic activity that is based on a finite depletable resource is not sustainable, but that doesn’t mean economic activity is unsustainable, so long as we can switch to other inputs.

This is known as “the fallacy of perfect substitution.” Some things are less substitutable than others, high energy-density liquid fuels being the classic example. We simply cannot produce anything which comes close to the portability and convenience of petroleum spirit (in the quantities required), and there’s no reason to believe that we ever will. Chemistry has rules, and they’re non-negotiable.

with trillions of watts of solar energy hitting the planet, there’s no reason to think high levels of economic activity aren’t sustainable for the long-run.

Unless you start actually running the numbers on how much of that energy can be practically captured for end-use by any foreseeable technology over a practical timescale… Thermodynamics can be a real bitch sometimes, solar cell production facilities don’t grow on trees, and net energy is the big problem.

n the meantime we need to ensure: 1. we don’t do any more irreversible damage (climate change, rainforest, coral reef etc. destruction) and 2. we don’t carry on blindly so that we’re suddenly screwed when the finite resources we have been using run out

Well, on point 1… Good luck with that (bearing in mind that a lot of these changes have long lag times – we’ve got a few more centuries of global warming and ocean acidification already locked in, even if we stop everything tomorrow). On point 2, the usually best-guess of the necessary lead time is at least 20 years. Even the most optimistic forecasters don’t think we have that long before peak oil hits (although they’re very good at disguising this through weasel words). More pessimistic forecasters say we passed peak in 2005. Either way, it’s too late already.

We are already screwed. We just don’t know how badly yet.

Oh and how is thermodynamics relevant to economics?

Economics is supposed to be a subset of reality. Thermodynamics is relevant to everything, because it’s basically what drives the Universe. Unless you believe that it is possible to achieve infinite leverage (and if you do, I’d like to see you explain how that will work in practice), then economic activity (like everything else in the Universe) is ultimately limited by the availability of energy. Are you really asserting that the (real) economy can be completely disconnected from matter and energy, and still mean anything? Or are you simply going down the Sci-Fi route of observing that there is lots of both in the Universe, and any problems with using more of both are simply problems of engineering?

@22 Not just entropy but the conservation of energy. Utilisation of all the hydrocarbon fuel reserves in the world will destroy the planet without some startlingly implausible technological development- carbon capture and sequestration is still in the lab. We are therefore offered the unpleasant choice between abandoning the abundant, convenient fuel that drives economic growth or poisoning the ecosystem. Attempts to replace the hydrocarbon fuel system of our civilisation with electric are being hamstrung by vested interests at every turn. Don’t even mention nuclear fission or fusion as an alternative. Remember that pretty much everything in your life is made from, delivered to you by or powered by hydrocarbons.

@23 Well, to be fair, “democracy” is a very broad term. My vision of it is a great deal more representative of mine- and other people’s- opinions than yours, though. The current government rules with a mandate derived from 38.4% of the electorate. To my mind that means that a majority if the electorate didn’t vote for this government. Do you call that mandate democratic?

Hahaaa! Plus what Dunc said. With knobs on.

Punkscience @ 27,

Firstly, our previous conversation – yes I think the government has a democratic mandate, as they control over half the seats in the House of Commons (this is how this country determines such things). I do not think that is a problem.

Secondly, your point about the limits of growth being imposed by hydrocarbons and vested interests kind of makes Left Outside’s argument – growth is not possible (in your assessment) because there are currently no technologies allowing it and those that might are being blocked by (very poorly run) companies. Well, if we overcome these problems, and produce cheap energy and defeat the corporations, then there is nothing (there – I’m sure we’ll find other hurdles) to stop growth and greater prosperity. Perhaps you would agree that that is an ideal, even if it is some way away.

@Watchman

On the first point, that may be how democracy is defined in this country but I- and this is my fundamental point- don’t agree with it. I also think that an argument from first principles reveals an astoundingly undemocratic system in the UK. My argument about the current government’s mandate is the first step in this analysis: If any government fails to receive the endorsement of the majority of the electorate then surely you don’t have a democracy, defined as “the rule of the people”. I also reject representative democracy, first past the post and an unwritten constitution as well as an unelected House of Lords.

On your second point, I agree with the majority of LeftOutside’s post. My objection was solely to the term “anti growthers”. George Monbiot has good stuff on societies that values growth above the wellbeing of their population. Your point about overcoming obstacles to perpetual growth actually refers to development, not growth, I believe. I believe that it is possible to achieve perpetual development. I don’t believe it is possible to achieve perpetual growth without colonising other planets, which is so distant an achievement as to be meaningless to this discussion.

@8 James Bloodworth: But that’s what I’m saying: we have.

Past tense.

We are rapidly approaching a point where real consequences are going to be seen on a global scale.

Future tense.

Which suggests to me that we aren’t now at a limit to growth, even if we might be in the future.

People have been fantasizing for years about us discovering some mystical new technology that will magically replace oil, but it’s not happening, is it?

You’ve never heard of wind, water, solar, or nuclear power? These technologies all exist now, and they’ll supply a larger proportion of our needs in future, as fossil fuels run out. (Actually “run out” is a misnomer: what will happen is that the cheaper-to-extract deposits will become depleted, so more expensive deposits will start to be used. This will push up the prices of fossil fuels, making alternatives more cost effective in comparison.

You’ve never heard of wind, water, solar, or nuclear power?

None of them can produce either (a) high enough energy densities to effectively substitute for hydrocarbons in their major applications or (b) net yields anywhere close to what we’re accustomed to, either at present or in the foreseeable future. You can’t just scale this stuff up arbitrarily quickly (it takes time and finance to build the production facilities to build the components needed to build the systems), and there are massive load balancing problems (even just dealing with grid electricity) because none of those alternatives are sufficiently dispatchable.

I’m a big proponent of alternative energy, but can we please be realistic about what can actually be achieved within both the laws of physics and reasonable timescales?

France seems to manage OK with, what, 80% of its electricity from nuclear?

France seems to manage OK with, what, 80% of its electricity from nuclear?

Because they’re tied into larger pan-European load balancing systems, so the total network component provided by nuclear is smaller (plus they do do a lot of clever stuff to improve the dispatchability of their nuclear fleet – but not enough to completely solve the problem). Modern electricity grids do not respect national boundaries.

Luis Enrique really should get a blog!

The thing about equality, is that if you want to spread wealth around, you have to create it in the first place. Growth creates prosperity, which can then be spread. If you don’t grow then you won’t have anything to share. Technology allows us to use a near infinite amount of energy from renewable sources, and there is enough land in the world to accommodate many times the Earth’s population, so if we change to renewable sources, we can continue to grow.

Lots of problems with definitions I fear
Socialism = a system that isn’t capitalism, but there are several possible models.

Democracy = ? The tyranny of the majority? Two wolves and a lamb deciding what’s for breakfast? What agenda? Whose agenda?

Fair = Same access for all? All have to have the same access?

Equal = You all have the same access but can I choose not to have it?..

And, not least, when you say economic growth, what do you mean? More goods are being produced, more profit is being made, you get to own a blue, red and green phone rather than just one black one.
As a socialist, you sure know how to talk the talk of capitalism.

LO, I’m flattered.

Happily it’s not at all obvious that there is a trade-off between equality and growth. There is a large mountain of inconclusive research on this topic.

In theory if there is a trade-off between growth and some other good thing today (like equality) then some reduction in growth might still be optimal (in theory tomorrow is ‘discounted’ so gains today have more weight).

Is the main point of this post something like trying to persuade lefties to think about economics less like a static allocation problem and more like a dynamic one, with an emphasis on productivity? If so, I’m all with you. After all we have seen, and the OP illustrates, that if you under-perform on growth then a few generations later you are Eastern Europe versus Western and nobody will thank you for that.

Hopefully future economic growth will have much less to do with growth in material consumption and instead be about more intangible goods and more about quality of environment etc. A future with abundant clean energy, sustainable material usage, high quality organic food for all, wonderful education, social services, healthcare, better housing etc. (whatever you’d like to see) will be a future that has experienced economic growth.

As far as economics is concerned, a society that goes from producing rubbish movies to producing very good movies, holding everything else constant, has experienced economic growth and if GDP doesn’t measure that, that just tells us GDP does not measure real economic output. Metaphorically speaking, movie-wise, the desirability of growth is more about quality than quantity.

Dunc.

Briefly:

Stock and Flow. The quantity of remaining oil or aluminum ore is a stock. The quantity of solar energy is a flow.

My point was merely that if we do have a “running out of finite resources problem” then zero-growth is no solution, and I made that point because some people do talk in terms of simply needing to stop growth whereas they should be talking about the need to stop relying on (and depleting) finite resources. Of course it makes sense to worry about running out of a resource if there is no feasible substitute. You appear to be even more pessimistic than me so I’m not sure why you are taking issue with this.

I cannot see how the laws of thermodynamics are going to be a binding constraint on economic activity in, say, the next 1000 years. Technology and economic organization, yes. Next time you see an economic model that feature long-run growth, think of them as referring to the short-run on a galactic scale.

oh bugger, missing close italics tag after first “if”

Further to #34: Also, grid electricity is the the least of our problems, as it accounts for less than 15% of our total energy consumption. (2009 Total Inland Energy Consumption: 211.1 MToe = 9EJ; 2009 Final Electricity Consumption: 322.4 TWh = 1.16 EJ; Source: ONS)

Many people do not seem to appreciate just how much energy there is in liquid fuels.

Dunc @39

I’m with you on that – gas being the big one (heating homes and fueling cookers)

Punkscience @30,

You do not agree with the definition of democracy, but it is a system whereby we freely elect our MPs, so it is democracy. Your critique would only be valid if once elected MPs had to (as opposed to habitually chose to) follow the decrees of their party leader – the problem our system has is strong parties overriding the interests of the MPs own electorates. Just because you do not like the electoral system does not make it not democratic – just not ideal in your view. I feel the same way about PR, but it is democratic.

And as to the anti-growthers, it may well be framing the debate, but I think it is an interesting framing; it makes you question the basis of the opposition to Left Outside’s point. You may be correct that what I desire is development rather than outright growth – putting a premium on existing labour, transactions whatever is probably at least as useful as producing more transactions – but I cannot really conceive of short-term development without growth as a driver, although again in the utopian future this should be overcome by the existence of the necessary surplus.

Before Popper it was believed by almost everyone that democracy was bound to be inefficient and slow, even if to be preferred in spite of that because of the advantages of freedom and the other moral benefits; and the most efficient government in theory would be some form of enlightened dictatorship.

Popper showed that this is not so; and he provides us with an altogether new and deeper understanding of how it comes about that most of the materially successful societies in the world are liberal democracies.

It is not – as, again, had been believed by most people before – because their prosperity has enabled them to afford that costly luxury called democracy; it is because democracy has played a crucial role in raising them out of a situation in which most of their members were poor, which had been the case in almost all of them when democracy began.

Bryan Magee Confessions of a Philosopher (1997)

Call yourself liberals?

I don’t know why you are so pessimistic about alternative sustainable energy sources, it seems to me the necessary technologies are close to providing feasible substitutes.

Because the bulk of our energy use is in liquid fuels, and these are the most difficult to substitute. Also, the technologies most likely to come closest to substituting for them have their own resource constraints – you can generate all the electricity you like, but scaling out, say, an electric car fleet (currently) requires either lithium batteries or rare earth catalysts for fuel cells – and both of those resources are extremely limited.

I cannot see how the laws of thermodynamics are going to be a binding constraint on economic activity in, say, the next 1000 years.

We’ve pretty much hit the Carnot limit when it comes to the efficiency of our existing technologies. A modern combined-cycle gas turbine is about as efficient as it’s ever going to get, and we’re not going to be able to scale out any of the alternatives anywhere near quickly enough. As I see it, we’re now facing a problem of “receding horizons” – we don’t have enough spare capacity to make these transitions quickly enough, and the longer it takes, the less able we will be. There’s a hole in the bucket.

Dunc,

It might be hard to recreate sustainable liquid fuels, but it’s a bit easier to start heating homes, cooking food with non-liquid fuels, and maybe changing modes of transport (more trains, less traveling) etc. That is to say, “substituting” for existing ways of doing things involves more flexibility than a straight swap of fuel.

“not being able to scale quickly enough” is certainly a constraint, but scaling more quickly would not involve violating the law of thermodynamics

A large reason this blog post was written was because I was playing with Excel (well, open office calc) in advance of my masters starting where I’ll probably need it.

The second reason I wrote it was because not all the things which you like are necessarily compatible. I did a whole course at uni on liberty and equality and something which repeatedly cropped up was that they are often incompatible. This blog sought to address some of the consequences of that.

The third reason this was written was, yes, to get leftists to think about economies in dynamic ways. World GDP just isn’t high enough for us to start talking about a steady state world; per capita (in $ which isn’t perfect) the per capita of the world is somewhere between Thailand and Malaysia. Those are places still with grinding poverty and they do not have a living standards I am happy for anyone to have to embrace.

I’ve used GDP, which is not perfect, but it is a common standard which is easy to refer to. In the long run some sort of Net Domestic Product which takes into account negative effects of growth, like ecological destruction etc would be useful, but I didn’t need that complication. The world is at risk from global warming and ecological degradation but not to the degree at which it makes sense for us all to adopt Malaysian living standards. What we need to do is continue to innovate, subsidise green technology and tax carbon. We do not need to panic and abandon economic growth.

@Jonathan Calder, I have written on democracy versus growth here http://leftoutside.wordpress.com/2010/08/24/the-worlds-largest-democracy-versus-the-workshop-of-the-world/ Dani Rodrik, sounds like your sorta guy. Democracy good.

@punkscientist again, I don’t mean anything derogatory by anti-growther, merely a shorthand for those advocating a steadystate economy, I shall switch to steadystaters from now on.

I’m not sure what you mean by development versus growth. For me development more or less means “catch up” growth, so China is developing, the UK is growing. China is copying things or reinventing things other nations already do, the UK is looking for totally new ways to do things to create more value (without necessarily using more resources, 80% of the increase in wealth seen in the US has come from technological progress only 20% is the result of more capita or labour input).

@Cherub There may be a dearth of investment opportunities, but that is not for me or you to work out, we couldn’t possibly begin to imagine in the level of complexity required. We can infer from individuals behaviour that there remain lots of possible investment opportunities but that there may not be as many as some boosters suggest.

I’m not necessarily saying that 3% growth is essential, just that we should be careful about aiming for what is lower than our maximum potential growth.

By far the best book I’ve read about this subject area is ‘Deep Economy: Economics as if the World Mattered’. by Bill Mckibben’.

http://www.amazon.co.uk/Deep-Economy-Economics-World-Mattered/dp/1851685766/ref=sr_1_1?ie=UTF8&s=books&qid=1284580065&sr=8-1

I would reccomend it. It is probably the best riposte I’ve read to the ‘growth at all costs’ crowd.

@LeftOutside – If you’d read the Sustainable Development Commission’s report I linked to in @9 you’d find a lengthy and well-referenced discussion of the contrasts between growth and development. Growth in neoclassical economic terms is a pretty useless index of wellbeing anyway so arguments about it are redundant. Luis Enrique’s comments you quote in @17 assume a considerable degree of decoupling which likely isn’t achievable- again, see the SDC report.

As Dunc has noted it may be possible to power the world through renewable technologies but how are we going to replace the entire existing infrastructure with a global supergrid and the appropriate generation capacity in less than a couple of decades? Its simply not economically possible without completely reconstructing the economic system. And that idea is my solution to matters: all the problems that people find with the current challenge are economic. There’s no reason why the current economic system- which is a human construct- should rule over the laws of thermodynamics- which are absolute. But that’s what we expected to have to overcome. So, so much research has been done now to show that neoclassical economics fundamentally undervalues ecosystem services and fails to account for externalities that its just laughable that we are still expected to solve the world’s problems within this bastardised framework just because the global elites benefit from business-as-usual. This is the biggest elephant in the room. George Monbiot has advocated a mobilisation of industry and manpower on the scale of the second World War to rebuild the nation’s infrastructure along sustainable lines but his is considered an extreme opinion by the mainstream media. There is no doubt that projects like DESERTEC have clear potential to transform the energy economy of Europe and yet the inertia of such a grand project is so great that it will be a decade before the first transmissions are made. That project is totally achievable in a couple of years with appropriate backing and yet we must sit around and watch new coal-fired power stations and open-cast mines being given the go-ahead in spite of successive government’s fine rhetoric on climate change. Its as stupid as letting the fishing lobby effectively determine fishing quotas against all scientific advice.

I guess I’m trying to point out that most policy- economic, energy or environmental- isn’t based upon evidence. Its based upon ideology. A brief glance at much of the ConDem coalition’s latest offerings confirms that. So the hierarchy of dysfunction runs: society is unfair because the economic system is irrational; the economic system is irrational because the system for determining it is undemocratic and influence by vested interests; the system is undemocratic because the people are misinformed, don’t care or are conflicted in their opinions to resolve the issue.

So where should efforts to resolve inequality be focussed?

Sorry for the rant, I’ve come quite along way there but framing a discussion of solutions to social and environmental problems in neoclassical economic terms needs to be recognised for the tail-chasing that it is.

Oh- and FYI, economic growth and economic development are quite distinct concepts. The UK’s growth is faltering whereas China’s is exploding. Both the Chinese and UK economies are developing but it seems that little of that development is sustainable.

So much wrong with this article:

1. Continued economic growth is (essentially) impossible.
2. The relationship between average income and quality of life levels off at around £18,000 per year per person. There’s very little evidence to suggest that increasing our wealth further will improve our quality of life.
3. Conversely, there are benefits to be had of living in a more equal society. Even if you did have to sacrifice long term financial prosperity, it might be worth it for increased health and happiness.
4. You assume that as the economy grows the distribution of wealth remains constant. This is not normally the case. The rich will tend to get richer faster than the poor.
5. You assume that economic growth is always desirable! The greatest fallacy ever force fed to the western world. Economic growth is sometimes desirable. The famous counter argument to the stronger assertion is this:
Two people are walking down the road, one says to the other “I’ll pay you £1000 to eat that dog turd”. The second man eats the turd and is duly given his £1000 compensation. He sees a second dog turd further down the road, and says “Now I’ll give you £1000 if you eat that dog turd!”. The first man eats the dog turd and gets his £1000 back. What have the two men achieved? Well they’ve just increased the GDP by £2000!
Economic growth is a positive thing so long as it has positive consequences. But once we accept this, then surely we should start to measure the consequences directly, and aim to improve health, well-being, education, etc, and stop treating economic growth as an end – the end, even! – rather than a means.

J.K. Rowling is the first author in history to earn a billion dollars. Lots of kids and adults must have got some utility from her work otherwise they would not have bought the books and films. Now J.K. Rowling earning a billion dollars made us a more unequal society. If J.K. Rowling had never been born we would be a more equal society. In what way would that make us a better society?

50. GreenAndy

‘ Economic growth is a positive thing so long as it has positive consequences. But once we accept this, then surely we should start to measure the consequences directly, and aim to improve health, well-being, education, etc, and stop treating economic growth as an end – the end, even! – rather than a means. ‘

In your opinion has ‘ health, well-being, education ‘ improved or gone backwards since the Industrial Revolution?

Absolutely no one treats economic growth as an end in itself. It is merely a means to raise the welfare and utility of humanity. A skilled worker in 1600 was not one iota better off than a skilled worker one thousand years before 1600. A minimum wage worker now can earn more wheat calories for an hours work than a skilled worker could earn for a day’s work in 1800. Calories are not an end in themselves but try living without them.

This discussion is probably fairly academic since due to numerous factors such as peak oil and coal, global warming, increasing water shortages etc etc, we are probably nearing the end of the 200 year long period of economic expansion. At least one, and probably a combination of the above will prove to be the limiting factor.

Unless of course you’re the sort of person who subscribes to the delusional notion that something can grow infinitely on a finite resource base.

This actually leads us to a number of interesting political questions about a steady state economy. Which have rarely been raised or even adressed outside the fringes.

The current justification for inequality, is that it is neccesary to maximise growth rates, and thus everyone benefits through the “trickle down effect”. But if the economy can no longer grow due to resource or environmental limits. Then what would be the justification then?

Perhaps it is fair to say that as long as the cake has been growing, and most of the population has to some degree benefited, ableit unequally, we have been able to avoid asking too many questions about how wealth is distributed. But if the cake is a steady size, then how it is distributed becomes the all important question.

Richard W -

“J.K. Rowling earning a billion dollars made us a more unequal society.”

I don’t think this is right, because I don’t think one person’s earning a billion dollars is enough to push up the average earnings of the top 10% of earners. (I’m assuming a measure of inequality based on comparing the incomes of the richest 10% with the incomes of the poorest 10%.)

Inequality is more about the difference between typical high earners (on £80,000, say) and typical low-earners (on £8,000, say) than the difference between the exceptionally wealthy and the exceptionally poor.

In any case, though, even if *some* very high earners spread enough happiness to offset the contribution they make to inequality, that doesn’t mean we can just brush aside all the evidence that, in practice, more unequal societies are worse places to live in all sorts of ways than more equal societies.

@ 53. Graham

Physical resources are not the driver of economic growth otherwise the resource rich would have the highest levels of growth and in time would be the wealthiest. That is a rather old fashioned Malthusian Mercantilist view of the world. What drives growth is the human brain the ‘ ultimate resource ‘. The capacity for humans to invent, adapt and innovate is infinite. Therefore, economic growth is infinite. Our polluting of the environment does have obvious constraints but physical resources themselves are not a constraint.

We could live in a steady state with a massively radical alteration of the monetary system if we so desired. The reason why growth is important is not for the sake of growth per se but because our system is based on positive interest rates. With positive interest rates and no growth we would have debt deflation.

@50 if the first person paid the second for a beautiful painting and the second paid the first for a lovely piece of furniture I assume you would say that both were better off?

There is nothing intrinsically different between that and your dog turd case other than your personal judgment as to what is “worthwhile” activity and what is not. I might agree with that judgment but that is not the point.

People are perfectly capable of deciding what is worthwhile for themselves. They don’t need you or anyone else deciding what will and what will not improve their “well-being”.

Some societies have tried taking that kind of line and you may recall it didn’t end well.

@ 55. G.O.

Of course she increased inequality. The collective wealth of the top 1%, 10%, 20% etc increased so the gap between the top and the bottom increased. I agree with you it is meaningless. However, it does not stop people using collective wealth to make a meaningless money illusion point. No matter how many billionaires we have in the top 1% does not in any way make the bottom 20% worse off. What matters to the bottom quintile for inequality is whether they are falling behind the second bottom quintile and the middle quintile. The same would apply to the second bottom in relation to the middle. For people higher up the income scales it does not matter if their incomes are growing at a slower rate than the top. After a certain level money has a diminishing marginal utility so they are not losing utility if they fall behind those above them in the income scale. So the point I was making inequality matters but just not in the way it is sometimes presented.

@57 – “WOOOOOoooOOOO!!! You’re advocating reallocation of wealth so you’re a pinko-commie channeling the spirit of Stalin!”

Using the ghost of communism as a scare tactic is really rather pathetic.

Sorry, hit submit a bit too early there.

@57 – “WOOOOOoooOOOO!!! You’re advocating reallocation of wealth so you’re a pinko-commie channeling the spirit of Stalin!”

Using the ghost of communism as a scare tactic is really rather pathetic.

“People are perfectly capable of deciding what is worthwhile for themselves.”

What, like junk food, consumer electronics and the latest Nike trainers? I think you’ll find that people are very susceptible to propaganda and in the absence of a decent education can be moulded into pretty much anything. Perfect example is the Tea Party, who believe they’re fighting to regain America for the little people whilst being bankrolled by and furthering the political conservatism of the extreme right wing billionaires of US politics.

@52

“Absolutely no one treats economic growth as an end in itself.”

Funny, because pretty much ALL of the political rhetoric deployed in discussions of our economy do exactly that.

“What, like junk food, consumer electronics and the latest Nike trainers?”

Yes, like those things. How very dare people want them.

“I think you’ll find that people are very susceptible to propaganda and in the absence of a decent education can be moulded into pretty much anything.”

WOOOOOoooooOOOOO, yes, if only the “little people” could be properly (re-)educated by the enlightenend ones.

Perhaps a nice holiday in the countryside for those caught wearing the forbidden footwear?

60. punkscience

“Absolutely no one treats economic growth as an end in itself.”

‘ Funny, because pretty much ALL of the political rhetoric deployed in discussions of our economy do exactly that. ‘

I have never heard anyone speaking about growth in terms of just having a larger number. Growth raises societal welfare and utility and that is the usual context when growth is discussed. I am sure you would say we could maintain utility for all and raise utility for some but as previously stated that would require a radical overhaul from the present model. Moreover, the UK does not operate in a closed economy but is one of the most open in the world. Therefore, it is quite difficult to see how the UK could be unilaterally radical.

cjcjcj, you are quite right, why should anyone tell you what you want/need, only you know this, as does everyone else. Why rely on some unknown person/producer to provide it for you, out of the millions of objects made and services offered each day, there is a good possibility that none are what you want/need, likewise everyone else. And, as you point out, centrally determined economies (I think you are probably referring to the soviet system) don’t make enough goods to address the variation of individual tastes and there was also a problem with distribution
But, there are other economic models that are far more efficient in providing for the individual than mass-production, markets and a centralized beaurocracy and which is also more ecologically friendly,
@60 Everybody talks of economic growth being positive, and there lies the problem, it is the language of capitalism which was started by the op, and consequently everyone goes into classical economics mode rather than rejecting its’ basic assumptions.

“A large reason this blog post was written was because I was playing with Excel (well, open office calc) in advance of my masters starting where I’ll probably need it.”

Very interesting thread.If you’re feeling like playing with your figures further why don’t you try the following.

1. Add a realistic growth model to compare with country 1 and 2. That is to say I think assuming growth rates remain the same over 100 years is unrealistic. Lets assume country 3 comes along and is a standard democracy, and starts on equal income as well. For the first 10 years they are run by the greedy bastard coalition, and focus exclusively on growth and get the 3% rate. Then the greedy bastards lose an election to the pink fluffies, who introduce measures to introduce a more equal society. They get 10 years of 2.5% growth but a better distrubution. Now assume the leader of the pink fluffies invades iraq, and loses the next election to the greedy bastards who return to growth at all costs and get 3% growth rates for 10 years. Then the pink fluffies return to power for another 10 years of 2.5% and so on. After 100 years, where we’ve had 50 years of 3% and 50 years of 2.5% how does country 3 compare?

2. What if we introduce a realistic economic cycle for the 2 countries? So instead of assuming 3% or 2.5% growth we assume different growth rates in different years according to the economic cycle. Maybe we assume the country going for growth has a more violent economic cycle and has a growth range of 6% at the peak and minus 2% during the recession. this compares to the more equal country which has 4% at the peak, and zero during the recession. After 100 years how do the 2 compare?

3. Lets make things more interesting and factor in another real world thing – war. More unequal societies have a higher probablity of civil war – particularly in the developing world. So lets keep the 2 countries as they are with 3% and 2.5% growth respectively, but with a different probability of civil war. Lets assume the country with 3% growth has a probability of having a civil war of 3% each year, and the 2.5% growth country has a probability of having a civil war of 2.5%. If a civil war occurs it reduces GDP by 25%, but also provides a subsequent bonus of +3% growth for 5 subsequent years (as capacity is already there). Again how does this effect things? What if we change probabilities of war and the costs and benefits of it?.

4. Lets try adding in random events over the course of the 100 years. The discovery of a natural resource under one countries’ control, a new technological boom (one country invents something major like the internet), or negative things like a natural disaster (Hurricane Katrina). How do these events influence things?
After doing this does the trade off you outline still seem a cast iron certainty? Or is trying to predict which path is better over 100 years fatally flawed, and the wealth of a country is influenced far more by random and non-economic policy factors than by which path its political leaders take the country.

“Why rely on some unknown person/producer to provide it for you, out of the millions of objects made and services offered each day, there is a good possibility that none are what you want/need, likewise everyone else.”

Talented as I am, I don’t think I could make (eg) a computer for myself, which is of course the work of many thousands of strangers from miners to designers.

While of course those goods and services which are not wanted do tend to stop being produced rather quickly.

Come on guys, economic growth is not “the language of capitalism” – growth is about expanding the production possibility frontier, it’s about making more things possible. It’s not just capitalists that are interested in that – “the people” (you know, that lot that left wing political movements of the people are there to help) are also interested in that. You may fine some historical left-wing figures have also been rather interested in growth, even their track record is patchy.

If you want better schools, if you want better care for the elderly, if you would like better housing, these things require growth unless you want offsetting decreases in elsewhere. Is that what non-capitalists want to see? If we’re going to see better schools and better care for the elderly in the UK, do you want to see an offsetting decline the UK manufacturing output, a decline in construction, a decline in media and arts? If not then you want growth.

Luis, I think you’re misunderstanding the position of the anti-growth people – they aren’t necessarily saying they wouldn’t like more growth – they are questioning whether it is possible, which is different.

65
And why do you think those goods and services, which are not wanted or needed disappear? Well the physical goods don’t actually disappear do they?
You already have the computer, so a new economic system would not make it disappear, the downside is, that if that system had existed before the computer was invented, you wouldn’t have acquired it, and you woudn’t be concerned over something that didn’t exist. and a whole system would not be built to rely upon it.

Well it’s clear that punkscience at least wants less junk food and fewer consumer electronics and Nike trainers, demand for which is simply a function of ignorance and propaganda.

“you woudn’t be concerned over something that didn’t exist and a whole system would not be built to rely upon it”

I see your new system, whatever it is, relies on the extinguishing of human imagination!

66
Sorry Luis, you are arguing from a fixed premise and that will take you along the same linear conclusions As i’ve already asked previously, the terms economic grown, democracy, equality and fairness need to be defined, because more objects are produced and consumed, it doen’t logically follow that we have a better standard of life or that it’s the only way to sustain survival. And we don’t need markets, or private ownership to invent new products which will make everybody’s life better.

Planeshift,

no, some commentators here argue that accepting the premise economic growth is desirable is ‘speaking the language of capitalism’ etc.

arguing the more growth is “not possible” is also very silly. let’s just agree to come back in 50 years and see what happens. I predict a repeat of this:
http://en.wikipedia.org/wiki/The_Limits_to_Growth

70
No, human imagination existed long before capitalism and markets.

steveb. your first sentence is meaningless tripe. The words growth, democracy etc. already have perfectly usable definitions: look them up. I quite agree “more objects” might not do much to improve life in rich countries, although I’m sure some “objects” will be invented that do and I look forward to future technological progress, and as I’ve said repeatedly, things like better housing and better social care better transport infrastructure etc., entail economic growth and you are fool if you think left wingers ought not be interested in these things.

Indeed.
So your statement that I wouldn’t be concerned about something which didn’t exist is wrong.

“arguing the more growth is “not possible” is also very silly. ”

I’m guessing a large part of this is down to the fact you and others are using different defanitions of growth.

This entire thread contains arguments against growth (perhaps defining growth differently to you), that from a lay persons perspective, seem very convincing. i.e that we cannot increase the rate in which we deplete natural resources because there are simply not the substitutes available within anything approaching a realistic timeframe.

Ok so we can turn crap films into good films at no expense to the planet, and we can call that growth. Thats a freebie. But sometimes we need increased use natural resources to make more stuff. And its this that is being objected to. So whether it is possible to continue to increase the rate at which we deplete natural resources – or even keep the rate the same – is actually the question here. What if it isn’t, and there are no substitutes available within a reasonable timeframe? (something that seems to be the case with oil) What are the implications for mainstream economics, and the wider political system? How does that effect our normative judgements on society?

I’ve yet to be convinced mainstream economics has even considered these questions, beyond just assuming substitutes for oil will automatically be found and adopted. Which seems a position of faith not science.

Arguing that people raising these concerns are silly and don’t understand economics because they are using the term ‘growth’ differently just isn’t convincing and reads like a resort to ad-hominem.

steveb, if we should not care for something that currently does not exist. Why do we put great effort into trying to develop new cures for diseases. Although we do not have the cures it still bothers us that they currently do not exist.

‘ No, human imagination existed long before capitalism and markets. ‘

Well yes. However, people did not sit around in an idealistic utopia. Most of them lived a short malnourished existence. The regular famines moved them from malnourished to starving. What helped to solve the famine problems? Yep, commodity markets where farmers could sell their crop forward and the price discovery mechanism let them know what and how much to grow. If crops failed they were not wiped out because someone else had borne the risk and they lived to plant another season.

74
My argument may be meaningless tripe when judged within the capitalist narrative and I am perfectly well aware of how the word democracy is being used eg representative democracy, and clearly you are not about to question ‘who sets the agenda’? Let me put it simply, why is it democratic to be offered black or white but not grey?
And I’m sorry that your life is so unfulfilled that you are awaiting more technological products – but more and better technology does not automatically mean economic growth. I know cjcjcj would like to have an array of every possibilty placed before him/her and I’m sure happiness would follow
And perhaps cjcjcj you can tell me about something that doesn’t exist that you are concerned about, and why you believe that it requires markets and capitalism in order for your to acquire it.

77
Yes we all want to cure illness and I don’t think I have ever stated that we should ban research and development but why does this need capitalism and markets, The Greeks and Egyptians and even cavemen did not sit around in an idealistic utopia so why does this debate include the notion that ivention and imagination spontaneously occured around 1776.

So steveb, at what point in economic progress do you feel we should have stopped?

1950, 1900, 1800, when?

So far, markets seem to have proved very efficient.
Certainly when compared to the sheer waste of the planned economies.
And the profit motive of course encourages efficiency: the greatest output for the least use of resources.
If there is an alternative model I’m sure we are all open minded, but so far you haven’t given us much detail.

Meanwhile I’m sure we are all delighted that your life is so complete relative to the sad and sorry state in which I find myself, looking forward to the new experiences which technological progress has in store for me.

Planeshift,

It is not “ad hominem” to argue that economic growth must be distinguished from an increasing rate of resource depletion. You are right much of mainstream economics does not incorporate resource depletion, because it’s looking at other questions, but plenty of mainstream economics does (there are lots of environmental economics courses out there, lots of perfectly mainstream growth models with finite resources etc.). It’s not difficult to capture in a mainstream economic model what would happen if finite resources are depleted without substitutes becoming available. You’re “yet to be convinced mainstream economics has even considered these questions” – how much effort have you made to discover what mainstream economics has to say on these questions? I don’t know what you think the right “scientific” approach is to the likely future path of technological development, but given the millions currently being invested in new energy R&D might I suggest the expectation of some progress on those fronts is reasonable? Of course it cannot be taken for granted that technology will be developed and infrastructure in place to achieve a painless transition; that’s why mainstream economists are arguing for carbon taxes, R&D subsidies, investment in public infrastructure etc. etc. It’s just arrogant and ignorant to think that somehow those who think about economic growth for a living haven’t considered questions that a teenager could think of after about 10 minutes thought.

Of course I’m sure you realise that markets were quite prominent in Greek and Roman (and no doubt Egyptian) civilisation.

“During the Principate and the first two centuries A.D., the economy of the Roman Empire was a capitalistic market system that was comparable to the economies of early modern Europe in the 17th-19th centuries. In many respects, it was the predecessor to early modern capitalism, and it is no coincidence that the most sophisticated economies of the early modern period were located in former regions of the Roman Empire.”

http://theses.asb.dk/projekter/fbspretrieve/2448/Economy_of_Roman_Empire.pdf

steveb I don’t know what the hell you are on about.

@ 76. Planeshift

Economists do not take the things you are speaking about serious is because to an economist the idea of a natural resource running out is an absurd notion. It is as if the resource depletion folks had never heard of the price mechanism. Nothing will run out it will just get prohibitively expensive and people will be forced to use alternatives. The high prices force people to seek new sources and recycle existing stocks. We did not send all the copper we have ever mined to Mars, it is still all here on earth in different forms.

The thing about natural resources is they are all currently cheaper in real terms than they were 30, 50, 100, 200 years ago. You know why they are cheaper? Because they are more abundant through our ability to exploit them and use them more efficiently. If they were scarcer they would be more expensive and they are not.

We will never in my opinion go back to the days of cheap oil. Moreover, we should be putting all our efforts into cutting back on our oil use because it does pollute. However, it is the expensive oil price that is and will drive innovations towards alternatives.

83
I’ve got to go to work now, but, economc growth relies on increased levels of consumption and production within the public economy. By reducing consumption of some existing goods and replacing it with the new products, there would not be a net increase in growth. Simple, I know. but I haven’t got time now to expand.
82 I was acutally referring to industrial capitalism (our current system) and as you note, this Roman system predates it, so I suppose it was human invention and imagination which created capitalism, I think this was my point. But you still haven’t answered my question in post 74

Clearly you can’t read.

Roman society was both capitalist and as “industrial” as prevailing technology permitted.

“It is as if the resource depletion folks had never heard of the price mechanism”

So yet again we have the assumption that people who disagree with the economist position only do so because they’ve never heard of it. As if we solve the worlds problems by making everyone read an economics textbook. Here’s a thought – perhaps the peak oil people might just have once heard of the argument you’ve made, but reject it.

“The high prices force people to seek new sources and recycle existing stocks. ”

But this is part of the problem isn’t it? Oil is so central to our lifestyles that price rises in oil significantly lower our standards of living. The answer to this problem is to let prices continue to rise so that new sources and substitutes are discovered – which is a solution dependant upon there actually being a substitute. As Dunc has argued earlier, nothing yet comes close to being a substitute for oil. The assumption is that continued investment from both private and public sources will eventually discover that substitute. But I haven’t yet seen Luis, yourself or any of the economist types on here confront the question what if we don’t develop a substitute in time? what do we do then?

Think of it another way; if i throw billions of venture capital into trying to develop a teleportation device it doesn’t mean I succeed.

This debate essentially rests upon two technical questions; is there a substitute for oil likely to become available in the next 30-40 years (less on more pessimistic forecasts), and are there likely to be oil discoveries or production techniques that postpone the date in which oil becomes too expensive to use on mass to all intents and purposes.

And if the answers to those questions are negative, what do we do about it?

Luis, I think you’re misunderstanding the position of the anti-growth people – they aren’t necessarily saying they wouldn’t like more growth – they are questioning whether it is possible, which is different.

Indeed. I, for one, would very much like to live in The Culture, but it doesn’t seem likely any time soon.

Oil is so central to our lifestyles that price rises in oil significantly lower our standards of living. The answer to this problem is to let prices continue to rise so that new sources and substitutes are discovered – which is a solution dependant upon there actually being a substitute. As Dunc has argued earlier, nothing yet comes close to being a substitute for oil. The assumption is that continued investment from both private and public sources will eventually discover that substitute.

There is also the problem that even if you do manage to come up with a substitute, building out the necessary infrastructure still requires oil, at least in the initial stages. As oil becomes more expensive, it also becomes more expensive to build alternatives – this is what I meant when I referred to “receding horizons” earlier. The price signal which is supposed to drive adoption of alternatives simultaneously makes them less affordable. The cornucopians seem to be in the position of arguing that oil will simultaneously be scarce and expensive enough to force the adoption of alternatives and abundant and cheap enough for us to manage the transition easily. I’m unconvinced that both of those ideas can be true at the same time.

A few interesting articles to chew on:

http://www.fraw.org.uk/mei/papers/adderbury_gathering-201006.pdf

http://www.postcarbon.org/article/40503-temporary-recession-or-the-end-of

Enjoy…

86
I think my reading ability is better than your ability to answer questions, what about answering the question I posed @78
@80, It’s pointless asking me about changing the past.
The fact is, there are so many assertions made about capitalism that are inaccurate and downright false,
Capitalism is an economic system which resulted from the invention and imagination of humans it wasn’t capitalism which enabled imagination and invention.
Not only does it not preserve scarce resources it is the most wasteful of all known systems.
It has failed to distribute wealth efficiently and cannot function without a lot of intervention’.
Much of the rhetoric relies on the observations of 18th century society and the prevailing economic exchanges.
The notion that people woudn’t innovate and produce without profit is nonsense because, despite your example of Roman markets, the majority of people, up until around 1800, produced for their own consumption.
But capitalism, like feudalism, provided a need for a certain period and like feudalism, capitalism is starting to fail big time, it has to make way for a more efficient system, especially if you want to carry-on having the choices you already have.
I actually don’t believe that you would be open-minded about looking at other possible economic models but try looking at Andre Gorz ‘The Politics of Time’.

@ Planeshift

I am not an geologist or an engineer so I don’t know the answers to your questions. However, I know how markets work and their power to signal scarcity and abundance. The oil market has been saying for some time that the era of cheap oil is over. Whether that means we are at or near peak oil I am not qualified to say. Even if we are not many people say we are near peak productive capacity. However, we should bear in mind that OPEC is a cartel who manipulate production to maintain a suitable price. If they did not manipulate production the price would fall. I think that would be a bad outcome as it would change consumer behaviour for the worse and slow down car manufactures innovations.

It is important to remember that the high prices of recent years have already been driving changes. There has been millions of barrels of permanent demand destruction in the US alone as people have switched to smaller more fuel efficient vehicles. Moreover, they have switched from oil heating their house to natural gas. The rise of Asian demand has somewhat offset this demand destruction. The natural gas price has collapsed through the technological breakthrough in shale cracking. We don’t as yet see the collapse in gas prices in this country because the gas firms hedged by buying forward before the gas price collapse. Apparently some of them have signed 20 year contracts at prices three times the current spot price. That is just an example where a major breakthrough occurs and there is a fundamental effect on prices. The US went from being a natural gas importer to being self sufficient with hundreds of years supply. Poland and Sweden will probably be the same.

As I said oil will just keep getting more expensive and firms and consumers will adapt and use it more efficiently. The market for alternatively fueled cars will grow, people will drive their petrol cars less and fly fewer trips. What will not happen is we wake up one morning and discover we have no oil left. That is just not the way markets work you will know well in advance just through the price.

Although I believe all the easy to recover stuff has been discovered and the finds now tend to be smaller fields than the past. I don’t actually think we will ever run out of any commodity, oil included. Some wells only have an economic recovery of 15% of the oil in the well with present day technology. Who can say whether the technology will advance to recover the rest. I don’t really see the issue as finding a substitute. To me it will probably be multiple substitutes.

The world of expensive oil will be radically different. It currently trades in a range of $70/80 pb. Probably if it was a bit more expensive it would give a much needed push towards innovation. However, our current economy would not be able to cope with $120 oil and that would push us into recession. Here is an interesting book that argues the case from an economist perspective. Julian Simon who is now deceased being a Cato Senior Fellow might be a bit right-wing but his book is very good

http://en.wikipedia.org/wiki/The_Ultimate_Resource
.
http://en.wikipedia.org/wiki/Julian_Lincoln_Simon

Dunk and Punk are really adding value to the debate here. I realise this is an old post but I just had to write and say I support the steady-state argument fully. Thermodynamics is the limiting factor to everything, without exception. All activities require energy, without exception. The attempt to de-couple economic growth from the use of resources in the hope that physics will magically change to accomodate human desire is the greatest folly of our age. In my view, all students of economics should first study physics.

An economy growing at 2% doubles every 40 years so even if all the inputs were renewable, those inputs would still have to double. Efficiency buys us time only if efficiency dividends are put towards stable-state substitution rather than more growth. There is no mathmatical or physical way out of this. There is no squirm room. The idea that ‘human ingenuity’ trumps physics is just a modern version of the desire for (non existant) perpetual motion machines so loved by the Victorians. So to all you growth advocates out there, do the maths. The computer you are using to read this relies entirely on the physics you say are easily confounded. I’ve been hoping I’ve been wrong about this for over 30 years but hope is not a sound basis for any calculation.

Thermodynamics is the limiting factor to everything, without exception.

Will no one rid me of this turbulent quasi-physicist!

Okay, I admit in extremis you are correct. But you have provided no evidence, and I maintain nor can you, that we have reached a sustainable level in thermodynamic terms or that you can tell when we did (or will) reach one.

Why today’s GDP of about $60trn dollars (about $9000 a head)?

Why not the GDP of 1820? Or 2020? Or 3020?

Where is this limit where further growth becomes impossible?

Because it is obviously not physically impossible yet, China and India, by even the most conservative estimates will continue adding GDP to the earth for another few years even if we stagnate.

What happens if we overreach?

An economy growing at 2% doubles every 40 years so even if all the inputs were renewable, those inputs would still have to double.

No! That isn’t true. Why would it be true?

Estimates have put extra inputs as responsible for only 20% of the earth’s er capita increase in wealth, higher productivity is responsible for 80% of that increase.

What you are saying is illogical and factually inaccurate.