Several years ago – in fact, a month before the 9/11 attacks and the recession that followed – I wrote an article titled The Consumption Trap for an Indian business newspaper. In it, I observed: “The world is caught in a consumption trap. An increasing number of people are passionate about maintaining a clean and unspoiled environment. Most people also want the convenience and comfort of many consumer goods, rare just a decade ago. We want increasing personal incomes so that we can afford the latest innovations, and a fast-growing economy that can sustain the current lifestyles. Economic growth – as defined now - depends on creating new wants and then satisfying them, and uses natural resources for energy, materials and waste disposal at every turn… Can the natural environment support this ever-growing consumption by the developed countries, increasingly joined now by large populations in developing countries?”
The reason I bring this up now, of course, is that we are in a much deeper recession and the only apparent solution is to spend our way out of it – even if it means we are spending borrowed money. I am not an economist, but I find it fascinating that we must consume more and more things each year in order to preserve the collective lifestyle that we have today. Besides budget deficits and all that, every dollar we spend necessarily converts some natural resources into products or services that we consume, while generating waste products immediately or over time. On the surface of this, there seems to be no way to sustain the economy – which really means to grow the economy, because an economy that is not growing could easily spiral into a recession – while also preserving our finite natural resources. The only remaining tool we have for tackling this conundrum is radical resource productivity: A set of technologies and business models that will allow us to consume more or less at the same level while actually using far fewer resources. This is essentially the approach advocated by Paul Hawken, et al, in Natural Capitalism. As the economy continues to grow, resource productivity will need to grow fast enough in order for us to hold on to the natural resources (including regenerative capabilities) that we still have.
Contrast that conventional line of thinking with Herman Daly’s steady-state economics. He sees the economy as an open subsystem of a finite and nongrowing ecosystem. He writes: “The economy lives by importing low-entropy matter-energy (raw materials) and exporting high-entropy matter-energy (waste). Any subsystem of a finite nongrowing system must itself at some point become nongrowing. At some optimal, or at least sustainable, scale the economic subsystem should be maintained in a steady state as far as possible.” This feels like a far more realistic view of the world, but how do you "maintain" the economy in a steady state without a slight perturbation ultimately pushing the system away from that state? The answer obviously depends on the stability of the system in that state.
I am hoping to explore this further in future posts. What better time to think of all this than in the midst of a (hopefully short and “reasonable”) recession?
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