If you’re going to start demanding a new economics, as the New Scientist just has, then it would be useful if you understood what the old economics you’re trying to replace has to say... as the New Scientist clearly doesn’t. Take this seemingly uncontroversial statement: "We live on a planet with finite resources - that's no …
Seems to be that even if you can make fewer bottles and more chips, there is a limit to how much of that one can do. Eventually, to grow further you need more sand, regardless what you do with it. The bigger picture may be different to what is suggested in the detail.
Growing without growing?
"If I use sand to make a wine bottle I will add some small amount of GDP. If I use that same sand and make a computer chip instead I will add more value and thus more to GDP with the same use of resources. "
But in practice you cannot do it with the same use of resources. Processing the sand into a microchip takes more energy, tools and auxiliary materials. And if nothing else, more labour. The singer example is better, but there the available growth potential is limited by the number of listeners willing to listen to you (also considering other available entertainment vying for their attention). Ultimately a continuously growing GDB requires a growing number of people making and buying things and services, even if those things are made without adding to the consumption of raw materials.
'There is thus no requirement for economic growth to mean an increase in the use of resources, natural or otherwise.'
Perhaps not 'theoretically', but certainly empirical studies suggest that it does in fact lead to an increase in resource use. Oil for instance:
Hmm I think both sides are missing a few points here. Although you can use the sand to make chip and thus ad value you are of course using other materials in the course of making such items not to mention the power required to make them.
I would be much more interested to see people growing rather than economies. We use the economy to somehow show how good we are without changing at all. I think the human race can only 'grow' through the people. We could all become less egotistical, less demanding, more encouraging and loving. Now that would be good growth instead of hiding behind the masks of economics, science, and politics.
Another obvious error...
Sure, you reduce the size of transistors, and you can make the same chip with less sand. But you don't keep selling it at the same price, or you go out of business fast. You either make it cheaper, and add less GDP for less sand, or you increase the number of transistors to add value and add the same GDP for the same amount of sand.
I didn't bother reading the rest after seeing such obvious mistakes in the first paragraph of an article supposedly explaining economics.
You know the point is correct...
when the only holes people pick are in the examples!
I wonder why they are not nit picking the singing example?
The point is in future when you can make chips by a highly efficent means then the resources and energy used will be less than the furnace used for glass making.
Growth is about improvement not consumption. (added value of volume!)
NS went to the media lovies too long ago...
one simple question for Tim
>More growth means using more resources." Umm, no, it doesn’t mean that.
So how would you go about growing the world's GDP by say, equalising the quality of life of everyone (on the planet) to, western european levels, without consuming more resources?
You are talking shit again.
Let me get this straight? You are saying that the earth's resources are NOT limited?
That this planet can continue to support more and more people infinitely?
ducks in a row
It might be the case that NS is pursuing a policy of plunging into some second Dark Ages of small economies and general ignorance & are recognising an approach of getting the ignorance bit done first
Fantastic - so if we all become bankers we can achieve immense economic growth and save the planet at the same time!
Mine's the one with holes in the elbows
GDP & Growth
"If I use sand to make a wine bottle I will add some small amount of GDP. If I use that same sand and make a computer chip instead I will add more value and thus more to GDP with the same use of resources"
Granted that is true. But if GDP ergo a nations wealth is low, then they will either a) buy the bottle or b) buy the chip. If a nation is wealthy, then there is the more common option c) buy both, thus comsume more resources.
Seems that GDP is the tool to measure growth, any suggestions to a better way?
singing doesn't increase GDP
If I pay Tim 20 units of currency to sing/not sing, we haven't actually increased the GDP, we've merely transfered 20 units of currency from one owner to another. GDP is increased by PRODUCING things (thats why it's the Gross Domestic PRODUCT)
Tim (mostly) right about this
Tim is right, and the New Scientist ought to be embarrassed publishing such ignorant drivel.
Look at it this way: imagine a future whereby solar and other renewable technologies continue to improve, and better renewable (or plentiful) materials are developed (bio-plastics, carbon fibre composites, whatever, it doesn't matter what) Of course such a system requires an input of energy - but that's the sun. It'll run out one day, but let's not worry about that yet. Never mind whether you think this is likely to happen or not, the point is that such a world would be sustainable no increase in resource use other than solar energy capture, and yet the economy would continue to grow in the economic sense.
You can pick holes in Tim's examples, but the point that technology progress is capable or reducing resource requirements is undeniable. You can get economic growth purely from the service sector - again, imagine that productivity in the production of goods and services rises, consumption of goods stays constant (no resource growth), but workers are reallocated to the service sector. That's economic growth.
Oh and to the 'obvious error' commentator above, who thinks that bringing prices into the picture negates Tim's argument - what do you think the general equilibrium consequences of a reduction in the price of computing power is .... oh that's right: growth.
It's quite possible that rich countries are close to the stage where economic growth takes place without increased resource use, especially as technological progress starts to focus on renewables. Where Tim is wrong, is that economic growth in currently poor countries is going to entail increase resource use, until renewable techs reach the level required.
NB nobody is saying the world can support more and more people indefinitely ... has anybody taken a look at the data on population growth trends, ex-immigration, in the rich world recently?
Read the article again - more carefully this time. His complaint is with New Scientist and their reasoning. The message might be right, but the logic is wrong. And it is wrong because the authors clearly don't understand the discipline known as 'economics'.
His follow-up point is that if those authors *did* understand economics then they would propose alternative, and more effective, ways of tackling the problem of the earth having finite resources.
My own point of view is that *anything* we propose or do is pointless until we have population growth under control. Once the world decides what an acceptable population count for humans is then we can sensibly focus on allocating resources amongst them (us).
Yeah - cos' the Adam Smith institute would never push a "growth at all costs" agenda...
Riiiight - let's believe a mouthpiece for the Adam Smith "Greed is Good" institute over a bunch of dispassionate scientists.
Last time I looked the burden of poof on science was far higher than that required for economists... - and it's non-existent for right-wing growth-at-all-costs think tanks.
A few comments.
One big factor missed is that 'resources' includes energy. As one example, while the sun's output is certainly limited, we don't have any control over its output (well, not yet, perhaps). So there's a great pile of free extra resources flowing in to the planet every day.
That said, there are real limits to growth. Even if we had free fusion-driven power, we couldn't deploy so much of it that the energy density was such that the average terrestrial temperature rose 100 degrees, for example.
And the simplest (in principle) method of reducing the rate of real or imagined natural resource depletion is to reduce headcount.
Paris, just because
"Let me get this straight? You are saying that the earth's resources are NOT limited?"
Let me be equally straight. That's not how I read the article. In fact, other than to briefly note that the finiteness of the Earth is, well, duh!, I don't think the article was about resources at all. It was about growth, and how that is not the same thing as resource consumption.
I don't know what "Reg" you've got buried under that headstone, but it isn't the one I'm reading.
GDP is a poor measure
New Scientist's article may be wide of the mark in several ways, but GDP is a rather poor measure of wealth.
For example, providing that the infrastructure isn't too damaged, natural disasters and wars lead to an increase in GDP. Neither does GDP indicate the distribution of wealth: if the super-rich get richer while many poor people get poorer GDP may nevertheless increase.
Wasn't it Ted Heath, whose single great innovation the three day week remains almost entirely unacknowledged, who talked about improvements to the quality of life?
Singing for <strike>Jesus</strike> the Economy
Ok, Parax demands someone pick a hole in the singing example. Well, here goes: It's not actually producing anything of sustainable value. You are turning something without material cost (your voice) into something without material value (a song). Can be done without much magic any day of the week.
But then, you'll say, how come people pay for it!? Well, to be honest, that really is a puzzling question. How many people have bought the winning singles from X-Factor over the years? Loads, I would suggest, given the fact that it is being tried every year again. How many are still proud owners of the winning X-Factor single of, say, three years ago? (I can't for the life of me remember what it was and must, therefore, resign myself to not call it by name)
So, people spent money on something (come to think of it, even for music, resources are actually <strike>wasted</strike> used, for CD production, distribution, recording, etc) which, ahem, did not exactly keep its value... Burning money on nothing is not actually creating wealth, though, is it? For the people involved with the original production, of course, but the purchasers do not get to keep something of equal value. So there is no overall improvement. Which we did not expect from X-Factor anyway.
And now for the actual article, which clearly hails a "dead Reg" icon: Every bit of human experience is that we improve design, yes, but in overall terms increase consumption all the same. You make CPUs faster and cheaper - yet their increased sale increases total use.
By simply claiming that improvements in a single unit of anything clearly means growth can be reached without additional resource consumption is ignoring the bleeding obvious: Growth first and foremost means increasing numbers. There was a time when a computer filled a whole room and had next to no computing power and memory, no graphics, no storage and no sound. I bet, it was a resource hog, too.
Still, at the time, all the computers in the world didn't use nearly as much electricity to run as the computers in a single medium-sized company will today. Despite the current ones being so much more efficient individually.
Scale up any other development in the world and you'll find the same thing. Yes, we improve the designs. Efficiency means less consumption per unit - but the increase in units always makes up for it. More than.
And one final thought on music: There was a time when music was heard by making it. You played in the privacy of your own home. You went to a concert, possibly directed by Mozart of Beethoven themselves. And the energy spent on making the music was nil beyond the living requirements of the musicians.
These days, people have massive audio systems, likely in more than one room in their house, in all of their cars and if they are out and about, iPods and their competitors will happily sap away some batteries' power to play music straight into their ear canals. And you are going to say that growth (i.e. the sale of all those things, because growth is measured in sales values) comes without an increase in resource consumption?
So I guess it comes down to
definitions of Finite. Something may be finite, such as sand, but I truly do believe that even if we increased production of glass and chips tenfold today, we would be in no danger of running out...
The real question - which is never properly answered, is which resources these characters are worried about, exactly how finite they are, and why they think business won't adapt in the x hundreds of years between now and any resource becoming nonviable.
Who's ignoring the real world here????
In the “messy and complex human interaction part of the world”, which you imply scientists ignore, growth certainly DOES mean using more resources. Look at the evidence of damaged, degraded spaces, depleted natural resources, and plummeting bio-diversity the world over. That’s what science does- it looks at the evidence.
So, umm, well, Mr snidey, sarcastic, rather unpleasant and angry sounding economist- it seems it is YOU who is ignoring real-world complexity. I suggest you return to studying your “core discoveries of the subject” (which, by the way, have helped precious little recently). And try to devise an economic model which proves your point. Or would that involve getting too messy and complex…?
You are all missing the point.
The article simply states that economic growth does not necessarily mean increasing resource usage. That's just a fact no matter how many examples you attempt to pick apart. This is about the theory and lack of understanding thereof on the part of NS. Real-world doesn't come into it at that point.
Anyway, back in the real-world and to join in the missing-the-point debate, there's fantastic amounts of resources we haven't even thought about using yet. We'll just start switching over time. Running out of resources completely isn't something we have to worry about for a while yet.
Get to the point
What's at the bottom of the economic chain.
If you imagine a very simple economy, the thing supporting everything else is food production.
If you produce excess food you can sell it. If food exists for sale then it allows other people to produce other things (instead of growing their own food) and exchange those things for food.
Is this not still the basis of our economy, it has to be, we all work to live (ie to eat), work is analogous with production and live is analogous with eat. So without excess food produced by someone we'd all be back to spending time trying to ensure we had food.
In an economy with that basis, growth is just an increase in food production. If you can do that without using more land and resource then you've increased everyones wealth as they can now exchange a smaller unit of labour for enough food to live.
Maybe I've got it all wrong, it's much harder to keep it all in your head when you scale it beyond an agricultural economy.
Normally I like New Scientist editions that focus on one topic but I found this one very hard to get through.
The whole thing seemed to be a very complicated way of saying "There are too many people on the planet for them all to live like Americans and this is why."
Re: Tim - good argument.
@Dave - Are you sure you posted this against the correct article? Where did he say that? The point is that you can have economic growth without using more of the earth's resources.
...but I think you missed the point of the article in New Scientist.
Wrong, Wrong, Wrong
You fail to make the distingsion between renewable and finite resources, and that is key to the whole argument.
In your example, your singing voice is nothing moire than a continually renewed resource.
As long as we are using finite resources, like sand or oil, to fuel growth then we will constantly staring down the wall.
We can achieve neverending growth, but only if we move over to using renewalble resources.
Increasing GDP increasing resources
But as a countries GDP increases, its consumption of materials will increase. This is nessecarily down to the fact that you need to use resources to generate GDP, but the fact that as peoples affluency increase so do there assperations.
This is the way consumerism works, third world countries the main focus for most people is to have enough food and water to survive. In the first world, we consume much more food and water than this (resources) and we want new cars, iphones, etc. Thus down to our increased growth, we have greatly increased resource use. directly or indirectly.
All well and good but
higher GDP == higher employment rates and higher per capita disposable income, which == more consumption, you need power and heat for the extra employees, and they buy stuff. Sure the technical measure of "economic growth" might be tied to GDP, but in practical terms a growing economy uses more resources, all that added value has to go somewhere, or it isn't, in fact, value at all.
Making a chip might add "more value" (here apparently defined as an increment of GDP) than making a wine bottle, but that's not an either/or choice is it ? We make wine bottles _and_ chips, not chips instead of wine bottles. And if making chips has a more pronounced effect on GDP, and therefore per capita income, it actually leads to higher consumption of other resources, especially ones like wine bottles.
"You know the point is correct when the only holes people pick are in the examples!"
Epic fail, if you use examples that are easily picked apart to illustrate a point, then your point becomes suspect even if it is a good one. After all, if it was a good point, you'd be able to come up with some good examples.
And unfortunately for the above commenter, the singer analogy is equally broken, since it it seems to assume that a professional singer consumes no resources which is utter arsewash. Singers consume resources in food, clothing, travel, education, power, construction of venues, travel resources for spectators, promotional materials, etc, etc. The singers (and indeed other musicians and performers) I know have carbon footprints like a charcoal yeti, so what's your point again ?
but then, coming from an Adam Smith Institute fellow, I'm not surprised the free markets ideals are shown to be the best!
It is indeed possible to increase wealth without using more resources, as you demonstrated with your singing example. But then, what do you do with that wealth? Buy land on the moon? No, increase of wealth means increased consumption of stuff, although not all the stuff will be resources-based (singer example again).
WTF. Actually, the world resources are closer to infinite than you think. Currently, we are not using a significant proportion of the world's resources. We're not even close. From a mass balance point of view the total quantity of each element on the planet has remained pretty much constant over the last couple of billion years. What's really being talked about here is that we're taking a material, pumping in energy, and converting it to something we consider to be more useful. The mass goes nowhere, it's still all here on planet earth. All that happens is we shuffle around some chemical bonds. The ONLY resource that is being used is energy but even that's not really a problem; it's still available in quantities we don't even get close to using. Currently most of the energy we use is in the form of energy stored that originally came from the sun. That is being depleted but the amount of energy that hits the surface of the earth every day is massive and we don't really significantly use it. Why is this important? If we could actually capture any reasonable amount of the suns energy or use something like a fusion reaction then energy would cease to have significant value. And at that point we can simply drive chemical reactions backwards and turn all that water and CO2 back into complex organic molecules that we do find useful. It's actually pretty easy (for example syn gas) but the issue is energy. So actually the BIG problem is not finite resources but our ability to capture enough energy to fully and repeatedly exploit the resources that are there. Trust me, there's a lot of carbon out there that isn't being used (carbonate rocks for example). So perhaps it is more accurate to say that there are finite resources that we can currently access. And that will change as it always has done.
@Tim - I'm with the AC
>You are talking shit again.
Or more eruditely, your point while valid, is only very minor, the trend is that increased growth leads to increased consumption, the key thing with economics is that the average standard of living cannot be above average, but that's what we strive for, with anything but communism you end up with a pyramid scheme, no matter how you cut it what something is "worth" depends on how much of it you have.
Paris, as i think she could of written a better article
Still not understanding?
The point is that economic growth does not *require* increased use of resources. In the example of oil, what's likely to happen is that if it starts to become scarce it will get more expensive and other ways of making energy will become cost effective. But that doesn't mean growth has to end, as the NS was asserting. Growth can continue to come from better technology.
It's possible to ignore GDP and just consider how wealthy people are. I imagine "equalising the quality of life of everyone (on the planet)" by using solar powered nano-assemblers that grow houses and food directly from atoms in the rock. Such a development would represent vast growth in wealth and not need more physical resources at all.
"I wonder why they are not nit picking the singing example?"
I will attempt to nitpick it. The singer will draw crowds, the crowds will need petrol for cars, paper for tickets, food and drink to consume during the performance. The more singers added to the population also increases the amount of food, fuel, land and other resources they consume. The economy can only really grow when there are more people ready to consume (which is why China is offering so many opportunities), so as a singer you would encourage the use of lots of resources to attract people to a performance and the use of resources in the course of putting on that performance. The more we have of anything the more resources it will consume.
will you still be "more interested to see people growing rather than economies" when you reach retirement age a pension fund smaller than your IQ?
Brilliant! Just shut down the oil, gas, lumbar and mining industries and we'll all become Opera singers! Brilliant! Why didn't these whingeing eco-terrorists think of this first! We can just listen to armchair neo-liberal economists called Tim singing Wagner all day. Brilliant!
It's just that there *isn't* a linear relationship between resource availability and use
That's all. Plus, you forgot, the NS innumerate "hockey stick curve" graph that had 8 or so curves plotted on it all heading for disaster with no scale on any of them to give you any idea of what they meant.
Just spreading panic and not science.
Have some ambition Dave, There is a whole universe full of resources, this is not the only planet.
The reason people are picking on the examples is that the author wishes to prove a point - that GDP can rise without natural resource usage increasing. If this point is true, it should be possible (easy?) to come up with some examples which, when all variables are taken into account, clearly show a rise in GDP with no corresponding rise in resource usage. Since the author failed to do that, his overall point is basically lost.
For instance, the chip example, it takes 100s of man years of work to just design the chip. The "value" comes from the design, not from the sand-to-chip process. And 100s of man years costs a lot of money in light and heat and computer time. And those computers have to come from somewhere. As does the software they run. And so on, ad infinitum. That "extra rise in GDP" because you're making chips rather than glass doesn't come from nowhere, and the author is disingenuous to claim that it does.
It seems naive to me to think that you can somehow magically "add more value" without actually doing more work.
There's no simple relationship between GDP and resource usage, that's true. But to claim that ever-increasing GDP does *not* require ever-increasing resource usage is a very bold claim that deserves some level of justification over and above this rag's insistence on ridiculing everyone else's points on the subject.
Historically, as GDP has risen, so has resource usage. That's an empirical fact. Until I hear otherwise, I'll take the empirical facts as being representative of the truth.
BTW, Tim, New Scientist did not accept that economics was a valid way of describing the world. On the contrary, by pointing out its hubris and flaws, they demonstrated quite clearly that it fails to do so. AIUI New Scientist accepts only empirical science as a valid way of describing the world.
Assume a can opener
Mr Worsthall has Challenging Opinion here. To evaluate it, we can look at say, evidence. Instead of metaphors conjured from thin air - I don't blame him though, he's an economist.
What do we find?
Here were the highest consumption growth rates from 1990-1998, accompanied by their respective growth in GDP:
And the lowest:
We can see that the countries for which higher (or lower) GDP did not march hand-in-hand with higher (or lower) resource consumption were those that were suffering political crises or are otherwise in a weird client-state relationship with another power - Moldova, Georgia, Sierra Leone, etc. with Sweden being a (slight) exception because, well, it's Sweden.
True only for limited sectors in developed economies
Tim: Like most people in the software business, I know all about GVA through intangibles, thanks. Musicians and artists are the same, as you point out, as are labour-only services (hairdressers, gardeners,...) and you could argue to put financial services in that pot, too. But these are all tertiary additions to our existing and growing resource usage in the underlying primary/secondary economy.
As 'Pete' points out above, the major issue is how we get the rest of the world up to the level where you can even think about growth in terms of intangibles, within the planet's many resource constraints. Even the primary needs of food, shelter and clean water are a mammoth task, let alone the transport systems, chip fabs and concert halls necessary for your examples. So you might be right in some academic economics sense within a limited scope, but it bears no relation to what is happening in the real world.
Attack on New Scientist is off base
Their basic point is right. Everyone knows it. Going off on NS as the basis for a political rant is not a very effective way to make your point. After all, if you want to get really picky like you are doing with NS, holding a concert or packing more transistors on a chip does use more resources.
Wingnut Tim to the rescue of a boring Thursday!
Growth without growth
"But that doesn’t change the fact that the basic point that they’re trying to make, that we must curb growth because it will inevitably mean the consumption of more resources, is simply wrong."
And what happens in the case of growth in population and in consumer demand (as we are witnessing in China and India, for example)?
Thanks for clearing up what GDP means but your carping about the central point of the the New Statesman is bollocks. Just playing the purist for the sake of looking smart.
The author did not say anything about population growth and his whole point was that "growth" isn't necessarily guaranteed to increase resource consumption. So you failed to get this straight.
You might also consider that the birth rate in developed countries (certainly Europe) has declined to less than 2 per person, leaving longevity and immigration to account for reasonably slow population growth.
Both sides are making limiting assumptions. New Scientist (ironically) would be correct in the face of zero technological progress. This article demonstrates that zero change in the rate of resource use can occur in concert with economic growth if there is technological progress or some other structural change. Clearly neither extreme is realistic. But the sin New Scientist commit remains. Only one counterexample is required to disprove something. Once this is done the rest is just rhetoric. New Scientist's sin is in starting with a false axiom. They could have done it right, and taken a researched middle ground. But starting a psuedo-scientific polemic like they did is just shoddy writing. The sad thing is that they are one of the better popular journals. It only goes downhill from there.
In the limit Mathus was clearly correct. But there has been an extraordinary amount of very shoddy writing of late about the imminent falling of the sky. It would be a very good idea if some of the writers actually got up and went out to talk to people in the primary resources industries, instead of simply repeating the same meme.
Also worth noting - the earth is a closed system except for energy. With enough energy anything is recyclable. Energy is a technological issue. Probably our biggest problem is an addiction to ridiculously cheap and easy energy. Move past stone age energy technologies and the current hand wringing over resources becomes quite obsolete.
Definition of growth
When I think of the term growth in relation to how it's integral to the current system, I look at like this:
Under the current system, a company is only as viable the value of it's shares, and the share price seems dependent on the continued growth of their profits. Thus, no company can be happy with sustained amount of profit, let alone decreased profit, even if it's still a huge monetry amount. Just look at the oil companies.
This leads companies - which are essentially amoral institutaions - to sacrifice human values and morality for the bottom line via efficiency and "working the system", because their survival depends on it. All the bad that we see companies and corporations doing around the world comes down basically to this.
It's not something inherent to companies or the people who work for them that makes them act like this, it's the current system at the root that is built the need for a constant growth of profits.
So what you're saying is that the entire population should sing for a living, and we'd be okay? I think you only have to watch ITV on a Saturday evening to know how wrong that is.