Our modern economy consumes vast amounts of energy and materials in order to grow. Two recently published books, by Andrew McAfee and Vaclav Smil, give two opposing answers to the question of whether earth’s limited resources pose fundamental limits to economic growth. This is question is relevant for developed economies, but even more so for emerging ones such as China and India that are trying to lift their vast populations out of poverty.
- In More From Less (2019), Andrew McAfee argues that a sustainable economy does not necessarily have to be a no-growth economy. He analyzes how the U.S. uses less of most resources, pollutes air and water less, and emits fewer greenhouse gases year after year, even as the economy and population continue to grow. He concludes that the U.S. is post-peak in its exploitation of the earth.
- In Growth (2019), Czech-Canadian scientist Vaclav Smil rejects the ideas of dematerialization (reducing the amount of required materials to serve the economy) and decoupling (maintaining economic growth without increasing environmental pressure). Every society is built on material building blocks (e.g. steel, plastic, concrete, ammonia, etc.) that are enabled by fossil energy sources. Limited availability of one of these crucial materials will limit growth in general and, indeed, emerging economies are consuming vast amounts of materials. To illustrate, since 2003, China has been consuming more cement in three years’ time than the U.S. did in the entire 20th century.
- The World Bank shows that, since 1960, there has been a global decline in energy intensity per unit GDP. However, this decline has stagnated over the last decade.
- New technology enables the transition to renewable energy, improvements in extraction methods and increases the energy efficiency of many processes. At the same time, new (digital) infrastructures are also high energy consumers in their own right. The question is really whether the overall footprint decreases when a new technology or infrastructure substitutes an old one. E.g., Bitcoin is often blamed for its high energy consumption, relative to traditional banking transactions, but these comparisons tend to be rather narrow and don’t include the full environmental impact of the banking system at large.
- Circularity is a term that has become a buzzword for progressive policies. Multiple cities, countries and regions aim for circularity in the use of resources and have formulated circularity goals and agendas. However, the world is still miles away from reaching circularity, as it is only 9% circular. And even the most radical transformations would only raise countries’ circularity to modest levels.
The debate about whether we are facing limits to economic growth due to the finitude of resources on planet earth is an old one. The two opposing positions that shaped the debate decades ago are still represented in today’s debate on growth: ecomodernism vs. ecologism; techno-optimism vs. techno-pessimism. The first argues that we can dematerialize economic growth, while the second argues that the earth’s finite carrying capacity means economic growth has to stop. Two well-known representatives of this old debate are ecomodernist Norman Borlaug and ecologist William Vogt. Norman Borlaug was convinced that science and technology would free humanity from the constraints of nature, while Vogt’s book Road to Survival (1948) warned of the dangers of the dwindling of earth’s resources and its rising population, which he took to spell global catastrophe. Perhaps the most famous report that takes the second position is The Limits to Growth published by the Club of Rome in 1972. It forecasted that as both economies and populations were growing, demand for materials would rise and limits to growth would become evident by 2072, leading to a “sudden and uncontrollable decline in both population and industrial capacity”. It predicted that globally, industrial output per capita would peak by 2008, food per capita would peak around 2020, and population would peak in 2030, followed by a rapid decline.
The debate about whether we are facing limits to economic growth due to the finitude of resources on planet earth is an old one
These predictions have proven to be miscalculated. Technological progress and the modernization of developing countries have helped to avoid the “peaks” predicted in the report. But almost fifty years later, the debate has not lost relevance and seems more urgent than ever. Most of all because climate change and environmental destruction are urging us to reconsider growth and its link to the consumption of earth’s resources. Certain questions have regained relevance, such as: Does the earth’s finite carrying capacity mean economic growth has to stop? Or can we dematerialize economic growth?
Only recently, two new books on the topic were published, representing the same old positions. Both analyze history and today’s state of economic growth, but come to different conclusions about growth and dematerialization. Both Andrew McAfee (an ecomodernist) and Václav Smil (an ecologist) show that throughout most of human history, prosperity was tightly linked to taking increasing amounts of resources from the earth; more minerals, more fossil fuels, more land for crops, more trees, more water, and so forth. Industrial Revolutions brought about the growth of our economies, our population, our prosperity; but they also led us to extract more resources from the planet and caused more pollution. Take, for instance, U.S. GDP and how closely it’s intertwined with energy consumption, they almost serve as a proxy for each other.
McAfee’s and Smil’s analyses of the present and their predictions about the future, however, diverge. McAfee points to evidence showing that Americans are using fewer resources that are seen as important building blocks of an economy (materials such as steel, copper, fertilizer, and timber are “post-peak”), while the economy keeps growing. Prior to 1970, total annual U.S. consumption of these resources had been increasing rapidly, but then reached a peak and declined. Also, as total energy consumption has flattened out since the Great Recession, he says, Americans have divorced energy use from their (increasingly services-driven) economy. This suggests that economic growth in a mature economy is not necessarily linked to an increase of natural resources. He concludes that modern economies are dematerializing and increasing energy efficiency. The bottom line is that even if we face resource scarcity, we will innovate our way out of it. What is more, according to McAfee, this phenomenon is not unique to the U.S. as it occurs elsewhere and will spread as capitalism and technology make their way across the globe. Growing economies are even good for the earth, he argues, as poverty is a big polluter (e.g. urban air pollution is much worse in emerging economies than in in Western cities). While fast-growing ones such as India and China are not yet dematerializing, he predicts they will start getting more from less of at least some resources soon.
Smil completely opposes the notion that growth can be decoupled from material consumption. Indeed, he says, we are able to make things with less material, but the fact that they have also become cheaper has encouraged production on a global scale; less is an enabling agent of more. For instance, the world now consumes nearly as much steel in one year as it did during the first decade after World War II, and more concrete than it consumed during the first half of the 20th century. Smil mostly analyzes the history of energy to come to these insights. The material building blocks of any society (plastics, steel, ammonia, concrete, etc.) are all enabled by fossil energy sources. And there is simply only a finite amount of energy, while the transition to renewable energy will take many more decades at least. Smil shows that the yield of crops, efficiency in producing materials, and the efficiency of energy converters are increasing, but at most by 3% a year, while energy has material limits. He adds that we should not forget the slack in our system, pointing to the amounts of food waste we face globally. Dematerialization and increase of energy efficiency are thus no reasons to believe in the decoupling of economic growth from its material foundation, according to Smil. Even if some countries, like the U.S., are showing dematerialization, globally we are still headed for a couple of generations of increasing consumption of everything, such as on the African continent. Smil concludes that the long-term survival of our civilization cannot be assured without setting limits on a global scale. The only hope would be that the global population might not expand beyond 9 billion.
To sum up, both authors show evidence for different narratives, but these can actually be combined: while it might be true that the scale of consumption of emerging countries will lead to resource scarcity, making it difficult to sustain the Western-style growth we have seen so far, at the same time, developed countries may experience dematerialization and lead the way to a different growth model.
- As we wrote before, a challenge to global growth is the rise of resource nationalism.
- Although post-materialism and minimalism are values that are gradually driving Western consumers to consume less “stuff”, their experience lifestyles are still built on high-energy practices (such as traveling).
- On our way towards a digital and increasingly smart economy, where AI plays a central role, some researchers callfor a more energy-conscious approach or the development of “Green AI”.