BU's emeritus Professor Nigel Jumps writes the latest in his series of blogs on the Dorset economy.
Fifty years ago, a book called The Limits to Growth was published by the Club of Rome/MIT (a group of prominent economists, scientists, and others). It caused a stir at the time because it highlighted global problems by modelling industrialisation, population change, malnutrition, resource depletion and environmental degradation (pollution) over the long run. It concluded that, without action, these factors would cause global economic growth to reach its limits within 100 years, leading to the potential for a collapse of current human civilisation.
Opponents questioned some of the findings and assumptions. They worried that human ingenuity and invention had not been factored in enough: an important mitigant against global disruption through exponential growth. The broad tenet, however, that growth has its limits because not all its effects (costs and benefits) are measured or considered optimally in personal and social decision making, seems relevant in the economically divided, climate change world of the mid 2020s. Halfway to the “Limits” horizon, the negative feedback loops that it discussed between environment, population and economy seem to be becoming part of our everyday local-to-global awareness, raising calls for economic, social and environmental reform. In summary, the debate is still between those who focus on the constraints of “one planet living” and those who foresee human invention, innovation and endeavour supporting further “progress”.
To avoid negative futures, the “Limits to Growth” emphasised demographic and capital constraint as likely to be necessary for reaching a sustainable equilibrium that does not sacrifice natural sustainability. It realised that goals and values lie at the heart of the change necessary to safeguard human progress.
The problem is, without growth, life is difficult. Without growth, on average, living standards of a growing population must fall. Without growth, expectations about incomes and the need to invest in ourselves over a career are thwarted. Without growth, the desire for our children and grandchildren to be better off is impossible for many and difficult for most. Without growth, the less well-off countries and communities cannot improve without the developed world losing. As we currently observe through migration, war, and trade, this can cause real tension between “haves and have nots”. Growth determines the size of the “cake” available for distribution. Without it, one person’s gain is another person’s loss. Moreover, as current responses to the cost-of-living crisis show, lack of growth brings the fear of social dissatisfaction and political populism.
A key question, though, is “growth of what”? We all need shelter, food, and energy but the form and nature of these basic factors changes over time. We all seek leisure and culture to make life rewarding and satisfying but the pattern of these aspirations is shifting constantly. In the end, it is growth of “value” that matters and what is valued is in permanent flux as innovation and learning progress. For example, if we value Dorset’s natural resources, how does the mixed public and market economy register that value against the value of annual holidays? If we value the NHS, how do we measure that value in comparison with the value of industrial products? In recognising the “limits to growth” in traditional “goods and services” and the need to balance with “experience and preservation”, what is valued and how we measure growth must change over time to reflect new utilities and satisfactions. We have to value the environment to want to conserve it. We have to value a more equitable distribution of productive and natural resources to create a balance of expectations and progress across communities.
As well as “limits to growth”, then, we all need to consider what it is we really “value”. Given the potential limits on traditional growth patterns, British business needs to be clear about society’s long-term sustainable goals for “new values” in the economy. This means business and state investment in sustainable capital formation and better education (skills and ambition) will be key to a positive productivity adjustment: one that builds leadership and technology skills and removes complacency. Right now, we should ask where and who are the political and other leaders to frame a debate about “new value” and agree a practical way forward to assess the “limits to growth”?
For example, if we are to shift from a dependence on fossil fuels for home heating and family transport, we need certainty and trust in viable and deliverable alternative technologies. At affordable cost, these new ways and means need to be backed by political and social commitment to identifiable and sustainable policy futures. Without such backing, it is difficult to choose the best individual, business, household and/or community options for longer term investment and wealth. In the end, do we want to retain personal transport and living space, or do we want to adjust to more integrated social provision?
Right now, in considering growth in new value,
1) the market is unclear about the optimal choices on business investment that will lead to the necessary transformation in new products and services and
2) the payback on new structures and systems is only in the heavily discounted, very long run, largely beyond producers’ and consumers’ personal time horizons.
Markets are far from perfect in measuring all the relevant costs and benefits, but it can be nudged in a better direction if politics can create a sustained framework for growth in appropriate values that a significant majority of the population endorse.
The main “limits to growth”, then, are perhaps a “limit to imagination” on value creation and wealth distribution. The question is who will supply the development infrastructure and productivity drivers that imagination implies and requires for future well-being? The answer has to be everyone. At the next General Election, will we be offered real choices on these essential matters? Will we accept short term pain for long term gain in order to reach a consensus on what we value and, then, to adjust our growth aspirations to the possible ‘limits to growth” in the mid 21st century and beyond?
