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A world without growth

Cancer is the only thing in nature that grows indefinitely at the same pace as the human economy.  It is no surprise then, that there have been a host of consequences from our political leaders’ endless pursuit of growth.  Global warming is the best known, least deadly, and most over-hyped of the fallout crises – resource shortages, soil depletion, deforestation, desertification, species extinctions, agricultural run-off, toxic water courses, are just a few of the less publicised environmental crises that threaten to wipe out billions of humans long before the temperature really starts to heat up.

To add to the crisis, we live in a grossly unequal economy in which growth mainly serves a tiny godzillionaire class along with their professional-managerial class lackeys, even as the majority have been pushed ever further into poverty – a process that operates both within countries and across the world as a whole.  The result is that a growing majority of the world population sees very little value in a form of growth from which they bear all of the costs while those in charge reap all of the transitory benefits.

The proposed alternatives come in two forms.  The first is a claim that something called “green” or “sustainable” growth will become possible with the development of new technologies and the harnessing of new energy sources such as – most notoriously – nuclear fusion.  The second – and more realistic – version is of a managed de-growth in which we attempt to maintain the useful elements of an advanced industrial economy while cutting back the vast amounts of waste.

It should go without saying that neither is going to happen for two simple reasons.  The first is that the people who enjoy the power of decision are having none of it – and are actively corralling their potential opponents into forms of protest that present zero threat to the status quo.  The second is that forces far more powerful in reversing growth are already in play and are growing in strength with each passing day.

The two key forces that are undermining economies around the globe – and especially the over-financialised western economies – are currency and energy.  Currency – the numbers on bank statements which account for 99 percent of our spending – is a kind of representation – a map if you will – of the real, material economy of goods and services created from Earth’s finite resources.  Economic models, which track the movement of currencies, are thus a map of a map, and so merely a simulacrum of the real world.  Crucial to driving growth, however, is the fact that currency is created by banks when they make loans.  As a consequence, almost every pound in circulation has interest attached – currently around six pence, which doesn’t sound like much until you consider that UK government borrowing in 2024 alone amounts to quarter of a trillion pounds – that’s a quarter of a trillion sixpences which have to come from somewhere… and that somewhere is from future growth.  In short, our currency system – and it is the same in other countries and in international banking and finance too – requires economic growth.  And should growth stall, the entire, multi-quadrillion dollar edifice will collapse, taking much of the things we value with it.

Energy is the means by which Earth’s resources are converted into the goods and services which currency buys and sells.  But unlike currency – which can be created by a stroke of a keyboard – energy is difficult to harness.  It is likely, for example, that the interlinked Atlantic economy of the seventeenth century was about as advanced and complex as a system powered solely with renewable energy can be.  Revolutions in shipbuilding, the advanced harnessing of wind with sail configurations, the use of waterpower in the new manufactories, and the use of charcoal-derived iron and steel for toolmaking and strengthening industrial machinery helped to create the trading relationships upon which the European empires were built.  Even so, the majority of the population had to work in agriculture to provide the food without which the entire system would have collapsed.  It is only with the advent of fossil fuels – and especially oil in the years after World War Two – that the agrarian workforce could be reduced to become the new industrial working class.  And it was only for two brief decades – 1953 to 1973 – that fossil fuels provided sufficient surplus energy to allow the living standards of workers in the developed economies to rise in line with productivity.  Moreover, the decline in majority living standards across those same economies has been the result of falling surplus energy as the energy cost of new energy has risen remorselessly.

We have, then, a currency system which requires permanent growth coupled to an energy system that increasingly struggles to meet that requirement.  To understand why this has morphed from a problem to a crisis requires unthinking the way most people understand growth.  This is perhaps best understood in the difference between simple and compound interest.  When a politician, central banker or economist talks about a growth rate of, say, 3.5 percent being desirable – providing people with jobs, providing returns to investors, and allowing savings and pensions to rise faster than inflation – most people imagine that 3.5 percent as simple interest.  That is, that each year the equivalent of 3.5 percent of the current economy is added.  In reality though, growth operates like compound interest in that it grows exponentially.  So that, when someone says they want an economic growth rate of 3.5 percent, what they are actually saying is that they want the economy to have doubled in size in just twenty years’ time.

This is why so-called “green” growth has gone mainstream.  Since the ruling classes that benefit from the currency are not about to replace it with an alternative that better reflects the energetic limits on growth, then growth itself will have to be transformed so that the many harms which it currently produces can be eradicated.  Magically, the economy will be doubled in size even as the fossil fuels which still make up 80 percent of the economy’s energy use are replaced with non-renewable renewable energy-harvesting technologies like wind turbines and solar panels, together with new nuclear – something which just watt for watt (and ignoring problems like intermittency and storage) – would require the construction of a new Hinkley Point nuclear power station every two days or the construction of a Hornsea offshore windfarm every day for the next quarter of a century.  And remember, the aim is not just to stand still, but to have more than doubled our energy consumption over that period.  And so, our requirement is more like a new nuke every day and a new Hornsea windfarm every 12 hours for 25 years… good luck with that.

De-coupling is the economists’ fantasy to divert attention from the impossibility of green growth.  This is the unevidenced belief that the economy can grow without having to grow its use of energy and materials.  Most often, various forms of techno-utopianism are thrown into the argument – the growth of the “virtual economy,” the switch from physical to digital products (e.g., swapping CDs for mp3 files) the development of artificial intelligence (which is still just machine learning) and virtual reality all, supposedly, lower the consumption of real energy and resources.  Except, of course, that the internet is a voracious consumer of electricity and which, out of sight requires a large turnover of hardware.  Moreover, the people who work in those digital sectors of the economy are still going to be spending their wages in the real world – buying and driving cars, taking out mortgages on houses, consuming food and drink, buying smartphones and laptops, and flying on aeroplanes to go on holiday.

Interestingly, while there is a growing de-growth movement, which sees the solution to our many looming crises in shrinking the economy to a sustainable size (different people have different views about what would be sustainable in this context) there is no status quo movement… the closest I have found to this was a British headmaster faced with yet another reform to education policy whose exasperated response was “can we not have a government that just leaves things alone for five years?”  This might be the best we could hope for, but as I have said elsewhere, the economy is like a souffle – it is either growing or collapsing, there is no steady state.

The best argument for a managed de-growth is that as the surplus energy available to the economy continues to shrink, we are past the point at which the things we have already built can be sustained.  The fact that our seat of government forms the bank of a river which is now so teeming with Greenwich Goldfish that the annual boatrace cannot be run without half of the crew being poisoned is just the latest example of the accelerating breakdown of our critical infrastructure.

Were it possible to shrink the economy in a manner which didn’t create massive social unrest, this would surely be preferable to the anticipated free-for-all that would follow the collapse of the currency system as the first stage of a more generalised collapse.  But the cold reality is that there is no collective with the power of decision which is going to do anything like this.  And while the efforts to build a de-growth community are laudable, it will never produce a movement that is not so fringe that the power elites can ignore or mock it.  In any case, the movement that is in the ascendancy at the moment is more diesel punk than techno-utopian, but its core argument is that we must look to science and technology for a solution while burning fossil fuels until that solution puts in an appearance.

The reason this latter is gathering support is precisely because the full – eco-austerity – cost of the proposed “green growth” – which, in any case, is neither green nor truly productive – is now being felt by a majority of the population at a time when rising prices have cut real incomes.  For the moment it is parties of the conservative right who are reaping the electoral fallout.  But as the living standards of the majority continue to slump, it is only a matter of time before parties of the left start playing catch-up… the British Labour Party ditching its £28bn pledge to support green energy being perhaps an early indication of this.

The problem is that a world without growth has impacts that go beyond the mere collapse of the banking and financial system… traumatic as that would undoubtedly be – especially for countries like the UK, which rely on overvalued currency to pay for their addiction to imported goods and resources.  More fundamentally, the current system of trading time for currency would rapidly breakdown, since the currency would no longer act as a store of value.  That is, nobody will be prepared to wait until the end of the month or even the end of the week to get paid when the value of the currency is prone to wild swings.  Something as long term as a pension, or savings more generally, would be impossible to sustain, as would other forms of long-term investment, since without growth you’d just as well store coins or precious metals under the proverbial mattress.

Class warfare would be inevitable, since the absence of growth rules out the current – or at least recent – practice of raising wages even as wealth is accumulated at a far faster pace.  The old American tolerance of billionaires – that every worker believes himself to be a temporarily embarrassed one – collapses without growth.  All that remains is the naked fight between workers and rulers for the relative share of what remains of the economy.  And in the event that the rulers manage to cling on by force, we have the lesson of the Western Roman Empire for what follows – the disenfranchised masses simply walk away… most likely in our civilisation, people will simply cease participating (see, e.g., “the great retirement” and the growing abandonment of working from offices).

Government – in the forms we know it today – would inevitably fail without growth.  Too many of the vested interests that government serves, and too many of the elected and employed people within government have a parasitic relationship to the wider population which can only be sustained for as long as there are sufficient bread and circuses to distract the masses.  In a world without growth, distractions will fail, consent will cease, and the iron fist of raw power will be all that remains… and rule by iron fist no longer requires such things as HR managers and diversity officers, or even more practical roles like social workers, senior headmasters, and probation officers.

In a world without growth, old evils which we thought we had overcome will begin to return.  Funding a massive penal system, for example, will be increasingly difficult and nineteenth century practices such as forced labour and the reintroduction of the death penalty are likely.  People with illnesses which can currently – at great cost and very high skill – be treated are likely to find accessing treatment ever more difficult, with treatment rationing becoming far more common in public health systems.  University education will shrink back, with access increasingly limited to the offspring of the elites.  Re-urbanisation – concentrating work and housing back into city centres – will be inevitable as the means of sustaining suburbia – oil-powered cars, asphalt highways, wide utility networks, etc., – become unaffordable.  Far more of the remaining population will have to be directly involved in more manual forms of agriculture as industrial machinery and agrichemicals become too expensive.  And old age will cease to exist – welfare returning to the old Poor Law system based on ability/disability rather than chronological age.

But those people who are leading the current opposition to green growth are themselves pursuing a fantasy.  Because the fossil fuels they want to keep burning while we wait for clever people somewhere else to invent the technologies to save the system are themselves depleting.  Indeed, the crucial “middle distillates” which are the lifeblood of the modern economy, have been depleting steadily for the best part of a decade even as less useful so-called “natural gas liquids” have held oil production up.  In other words, even the proponents of non-green growth face not only a looming end of growth, but the start of an irreversible decline.

Absent some new and highly dense energy sources, along with affordable technologies to harness them – and none exists or is even on the horizon – it makes little difference whether one chooses the green growth, fossil fuel growth, or de-growth hand carts… because they are all merely different ways of going to you know where.

As you made it to the end…

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