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http://carolynbaker.net/2011/07/24/1807/

“The End of Growth”

While “experts” assure us that the economy is slowly emerging from recession, a growing camp of well-informed dissenters thinks not. The scant evidence of recovery, insists this group, is not an anomaly but the sign of a profound sea change. The End of Growth, one book unequivocally calls it, next to a cover image of a burst balloon and a pin. The book’s author, Richard Heinberg, makes his case by far the most eloquently and comprehensively—and though it may be a decidedly unwelcome one for those now struggling, that doesn’t detract from its validity.

The limits-to-growth debate began in 1972 with the MIT report of the same name. That seminal study concluded that without preventive action, sometime early this century the global economy would collide catastrophically with hard ecological limits. No one acted, and now the economy is, in Heinberg’s judgment, trapped in a rut from which there’s no escape. Heinberg is a leading authority on one critical natural limit precluding further growth, that of oil supply—on which his The Party’s Over is a standard reference. In this new book, he argues that industrial economies are on the eve of a great contraction. Though we may see temporary revivals of growth hereafter, even ones lasting entire quarters or years, the overall trend line will be pointed steeply downward.

Whether unending growth is a fundamental good or the root of all evil, the simple fact is that it’s the basic characteristic of modern-day “developed” economies—as well as an impossibility. Industrial economies must continually grow, yet they can’t grow forever because that’s impossible in a finite world. An expanding economy requires ever-increasing quantities of natural resources, and unfortunately many of these resources are in decline or face imminent decline. For example, conventional oil production peaked in 2005 and total liquid fuels production, which includes unconventional sources like ethanol and tar sands, may now also be in terminal decline. These facts are common knowledge among those who follow the issues, but are hard to find on the radar screen of the general public.

What has many believing that the U.S. economy in particular is in recovery is the steady rise in GDP since the third quarter of 2009. But Heinberg dismisses this growth as almost entirely due to government stimulus spending; and anyway, he argues, GDP is a poor measure of economic health, revealing nothing about income distribution, non-monetary transactions or people’s overall well-being. For example, if you eat at home instead of at restaurants and grow your own food rather than buying it, you’re hurting GDP even as you practice thrift and self-reliance. And even granting that the economy really has resumed growth, it’s done so against what Heinberg calls an unhealthy backdrop of dramatically higher unemployment and severely reduced tax revenues compared to pre-recession levels.

The End of Growth provides a brief but sweeping account of economic history, which Heinberg says can be condensed into one sentence: “As societies have grown more complex, larger, more far-flung, and diverse, the tribe-based gift economy has shrunk in importance, while the trade economy has grown to dominate most aspects of people’s lives, and has expanded in scope to encompass the entire planet.” In ancient gift economies, community members shared with one another and trade occurred only among strangers, since trade within a community would have been taken as an affront. Then along came money, fractional reserve banking, interest and other innovations that steadily propelled humankind from the gift economy to today’s trade economies marked by fierce competition.

Heinberg sees the dogfighting between Keynesian New Deal economics and the “trickle-down” Reaganomics of 50 years later as effectively over, with both sides having fallen flat on their faces. The fantastic sums that governments spent trying to restart growth during the recent recession brought no lasting growth at all. And the lavish corporate bonuses given at a time when people at large had scarcely had it so badly showed how wrong the trickle-down ideal had been. Both Keynesism and Reaganism were doomed because both believed in perpetual growth. And their mutual demise leaves us with “a crisis not just of the economy, but also of economic theory and philosophy,” writes Heinberg.

Technology boosters like pointing to the incredible breakthroughs in computer technology in recent times as proof that human innovation can solve all our problems. They invoke something called Moore’s law, the observation that every two years sees a doubling in how many transistors can fit onto a microchip. But as Heinberg and others have noted, computers are able to advance so quickly because they’re small and have rapid inventory turnovers. Our monetary and energy systems, in contrast, are anything but small and require great foresight and planning. Thus, in Heinberg’s view, “[w]e’re counting on Moore’s law while setting the stage for Murphy’s.”

In his discussion of the limits to innovation, Heinberg brings up a little-known book titled The Limits of Business Development and Economic Growth. Its author, Swedish business consultant Mats Larsson, suggests that human beings have a finite ability to invent truly new activities. Most recent inventions, he argues, have been just slight improvements in the speed of rudimentary things that we’ve long been doing anyway, such as travel, transport, communication and trade. Larsson sees the big international corporations becoming ever more evenly matched due to the general slowdown in innovation. And at the time of the book’s writing in 2004 he predicted that we’d begin seeing hard limits to business development around 2005 to 2015. For obvious reasons, his book received no mainstream attention.

Like most sensible observers of our predicament, Heinberg sees little chance that industrial societies will voluntarily adopt the self-restraint needed to avert disaster. He believes that necessity will be the driver of change, and that governments and other large-scale institutions will be of limited usefulness. Thus, his recommendations focus on what individuals, families and communities can do to better weather the transition. The common thread throughout these suggestions is the need to revive community cohesiveness and long-abandoned systems of local organization.

The unprecedented mobility that people enjoyed during the abundant-oil era led to a society in which close neighbors have become complete strangers. Heinberg calls this a “bizarre situation” that will prove dangerous as people once again have to rely on one another for help. But he sees promise in a number of current relocalization efforts, including Rob Hopkins’ Transition Town movement and the Common Security Clubs (the latter seeking to provide personal and economic security to jobless among the community). Heinberg also has some interesting thoughts on how to put these and other initiatives on the map, such as relocating existing community organizations to prominent storefronts.

Some other recommendations include the outlawing of usury, a “haircut” approach to debt jubilee and a system of debt-free money issued by governments or central banks. Heinberg sees particular promise in the haircut idea, which would work by lopping down all debts, investments and savings alike by a certain percentage, while leaving assets worth less than, say, $25,000 untouched. This would obviously be unpopular among the well-off, but would be a huge relief to those on fixed incomes.

In the several years or so since peak oil began generating significant literature and debate, it has attracted a diverse array of thinkers. To name a few, there are insiders like Colin Campbell and Ken Deffeyes who sounded the first warnings; a clinical psychologist in the field of “peak oil blues,” Kathy McMahon; an archdruid practiced in nature’s less readily perceptible energies, John Michael Greer; and a couple of social critics/comedians, Jim Kunstler and Dmitry Orlov. Richard Heinberg’s distinction is that he’s hands-down the most prolific peak oil author, now having written half a dozen books on the subject and a few others touching on it tangentially. He’s hardly done, and I think I speak for most when I say that it’ll be exciting to see what he comes up with next.