Richard Heinberg’s latest book, The End of Growth: Adapting to Our New Economic Reality, argues for a new economic paradigm. He presents a clear, thorough, and convincing argument that our faith in unrelenting growth and unfettered capitalism has led to the demise of our global economic system. The book is well-cited throughout, encouraging curious readers to dig deeper into the source material that helped shape Heinberg’s case. (He acknowledges in particular our own Capital Institute Founder, John Fullerton, who provided background for the book from his perspective as a former managing director at JP Morgan on how Wall Street has evolved over the past quarter century.)
It is unfortunate that Heinberg’s terms seem harsh, but as a young person who is already concerned with limits to growth, he clarifies that the time is now for an era of qualitative development rather than quantitative growth. The End of Growth appropriately invokes fear and a sense of irreversible urgency but it is all in the cause of productive change towards a more buoyant and adaptable economy.
The most important thrust of Heinberg’s argument is the strong correlation between oil prices and economic expansion. According to Heinberg, continuing sustained growth is impossible because growth depends on 1) ever-increasing debt and 2) fossil fuels. We are quickly running out of both and are unlikely to replace either in the immediate future. As a result, we need to view the recession of 2008, from which we have yet to recover, in a different light than our previous booms and busts. It is not a temporary phenomenon, one of a long series of cyclical recessions, rather it signifies the end of growth as we know it.
Future economic growth will be impeded by the depletion of critical, natural resources, the increased costs of extraction and its associated negative environmental impacts, and ever mounting debt. Heinberg traces the history of economic activity to explicate how we have reached this point. Citing recent examples like the BP oil crisis, he notes that, by 2020, 40% of world oil will be sourced offshore (International Energy Agency) and surmises that there will be worse oil-related environmental crises with associated remediation costs to come. In order to effectively redirect our economy, Heinberg suggests, “…we must see both the forest (big, long-term trends) and the trees (the immediate challenges ahead).”
While we commonly trust that innovation will save us, as we have historically assumed that resource substitution and energy efficiency will enable continued, unfettered economic growth, Heinberg asserts that unless we can overturn the laws of physics, we cannot innovate our way to perpetual growth. What’s more, our government appears unable to lead major technological advancements in innovation and infrastructure in the appropriate time frame, overwhelmed as it is with debt and gridlocked by political conflict.
Despite the compelling evidence that we are reaching the “end of growth,” the leaders of the developed world are in denial, Heinberg reports, and, he notes, “blind disregard of limits can lead to disaster.” If decision-makers are unwilling to prepare for the consequences of the end of growth, then Heinberg believes a call to action must be issued to “receptive individuals and communities” to prepare for a new reality without growth.
There is no silver bullet, and ultimately, we need to reduce debt and find the balance between economic efficiency and resilience, starting within our communities. In the short term, however, Heinberg suggests we have no choice but to incur further debt in order to build a more sustainable economic infrastructure. Instead of maximizing throughput, we need to focus more on our adaptability, diversity, and interconnectivity.
Most importantly, for Heinberg, the priority must be building and preserving the social cohesion necessary to establish a common framework for a new economy. To facilitate that goal, Heinberg has created www.endofgrowth.com, a compilation of resources.
Heinberg’s reason for writing The End of Growth: Adapting to Our New Economic Reality is to inform a post-growth dialogue. The end of growth as we know it is due to the exhaustion of natural and fiscal resources in a world with a continually growing population. In that context, the quantitative economic growth that we have become accustomed to will no longer be achievable. As an alternative, we must look to qualitative growth in social and environmental well-being.
The world Heinberg envisions, of deeper social bonds and recognition of our interdependence with the environment, is one we should welcome. I just hope that Heinberg’s somewhat dark, but fundamentally realistic message does not turn off the broader audience it needs to reach to collectively re-frame our perception of growth and awareness of boundaries.–Liana Scobie is a Capital Institute Fellow