Can the economy grow forever?
Let’s say you discover a magical
gold coin that doubles every 25 years.
75 years later,
you’d only have eight coins.
But 1,000 years later,
you’d have over a trillion.
And in just 4,600 years, your gold coins
would outweigh the observable universe.
This periodic doubling is an example
of exponential growth,
and while we’re not in any danger of
discovering a real-life golden goose-coin,
something almost as consequential
has been growing like this
for the past 200 or so years:
the global economy.
Many economists think
that an eternally growing economy
is necessary
to keep improving people’s lives,
and that if the global economy
stops growing,
people would fight more over the
fixed amount of value that exists,
rather than working to generate new value.
That raises the question:
is infinite growth possible
on a finite planet?
We measure economic growth by tracking
the total financial value
of everything a country (or the world)
produces and sells on the market.
These products can help
us meet basic needs
or improve our individual and collective
quality of life.
But they also, crucially, take resources
to invent, build, or maintain.
For example, this smartphone.
It’s valuable in part because it contains
aluminum, gallium, and silicon,
all of which took energy and resources
to mine, purify, and turn into a phone.
It’s also valuable because of all
the effort that went
into designing the hardware
and writing the software.
And it’s also valuable because a guy
in a black turtleneck got up on stage
and told you it was.
So how do we grow
the total financial value of all things?
One way is to make more things.
Another way is to invent new things.
However you do it, growing the economy
requires resources and energy.
And eventually, won’t we just run out?
To answer this question, let's consider
what goes into the economy
and what comes out of it:
its inputs are labor, capital—
which you can think of as money—
and natural resources,
like water or energy.
Its output is value.
Over the past 200 years, economies have
gotten exponentially more efficient
at producing value.
If we, as a species,
are able to keep upgrading our economies
so that they get ever-more efficient,
we could theoretically pump out
more and more value using the same—
or, let’s be really ambitious here—
fewer resources.
So, how do we do that?
How do we increase efficiency?
With new technologies.
This is where we hit a snag.
New tech, in addition to making
things more efficient,
can also generate new demand,
which ends up using more resources.
We’re actually not in imminent danger
of running out of most resources.
But we have a much bigger
and more immediate problem:
the global economy, and in particular
those of rich countries,
is driving climate change and destroying
valuable natural environments
on which all of us depend—
soil, forests, fisheries,
and countless other resources
that help keep our civilization running.
So, what should we do?
This is where economists disagree.
Most economists think that new ideas will
be able to fix most of these problems.
They argue that,
in the same way that exponentially
increasing resource and energy use
have fueled exponential
economic growth,
human ingenuity has also
increased exponentially,
and will rise to meet these challenges
in ways that we simply can't predict.
For example, between 2000 and 2014,
Germany grew their GDP by 16%,
while cutting CO2 emissions by 12%.
That’s impressive, but it’s not cutting
emissions fast enough
to limit warming to 1.5 degrees Celsius.
For this reason and others,
some economists think the solution is
to reengineer our economies completely.
They make the case that what we should
really be doing is weaning ourselves
from the addiction to growth
and shifting to a post-growth economy.
What would that look like?
A post-growth economy wouldn’t assume
that the economy should grow;
instead, it would require us to focus
on improving what we really need—
things like renewable energy,
healthcare, and public transportation.
To do that, post-growth economists
suggest that rich countries
should do things like guarantee
living wages,
reduce wealth and income inequality,
and ensure universal access
to public services, like healthcare.
In such an economy, people would be
theoretically less dependent on their jobs
to earn their living or get healthcare,
so it might be more feasible
to scale down production
of things deemed less necessary.
But this raises other questions:
who gets to define what’s necessary?
How would we resolve
the inevitable disagreements?
Could we really do
away with entire industries?
The “we’ll come up with new ideas
to solve these problems” approach
can seem as realistic as,
well, a magical gold coin.
And the “we have to fundamentally change
our economies” approach
can seem politically daunting,
particularly in rich countries.
One way or another, we have to find
a way to benefit everyone
while also taking care of our planet.
