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'The End of Growth' is a book by Richard Heinberg that is set for publication by New Society Publishers in July 2011. What follows below is a synopsis and abridgment of Heinberg's introduction to the book. (If you want a PDF copy of the entire unedited introduction, click here.
The central assertion of this important book is both simple and startling: Economic growth as we have known it is essentially over and done with.
The economic "growth" of the past consisted of the expansion of the overall size of the economy (with ever more people being served and ever more money changing hands). It also had to do with the quantities of energy and material goods flowing through it.
The economic crisis that began in 2007-2008 was both foreseeable and inevitable, and it marks a permanent, fundamental break from past decades--a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. But there are now fundamental barriers to ongoing economic expansion, and the modern world is increasingly colliding with those barriers.
This is not to say the U.S. or the world as a whole will never see another quarter or year of growth relative to the previous quarter or year. However, when the bumps are averaged out, the general trend-line of the economy (measured in terms of production and consumption of real goods) will be level or downward rather than upward, from now on.
It will simply not be possible for any region, nation, or business to continue growing in any sustained way. Whatever growth does take place, temporarily, will be achieved at the expense of other regions, nations, or businesses. Another way to say this is that the global economy is now playing a zero-sum game with Mother Nature, in which an ever-shrinking pot will be divided up among the winners.
Why is economic growth ending?
Financial pundits point to profound problems internal to the economy--including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble--as immediate threats to the resumption of economic growth. Their assumption, however, is that eventually, once these problems are properly dealt with, growth can and will pick up again. But the pundits fail to see factors external to the financial economy that make a resumption of conventional economic growth an impossibility. In other words, this is not a temporary condition, it is permanent.
Four obstacles to further economic growth
- The depletion of important resources including fossil fuels and minerals;
- The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)--leading to snowballing costs from both these impacts and the efforts to clean them up;
- Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs
- The inability of these same systems (in the context of a shrinking economy) to cope with the enormous piles of government and private debt that have been generated over the past couple of decades and that will apparently continue to be generated.
Despite the tendency of financial commentators to focus only on the last two of these four obstacles, it is possible to point to literally thousands of events in recent years that illustrate how all four are interacting, and are hitting home with ever more force. For example, consider just one such event:
The Deepwater Horizon oil catastrophe of 2010 in the Gulf of Mexico
The fact that BP was drilling for oil in deep water in the Gulf of Mexico illustrates a global trend: while the world is not in danger of running out of oil anytime soon, there is very little new oil to be found in onshore areas where drilling is cheap. Those areas have already been explored and their rich pools of hydrocarbons are being depleted. According to the International Energy Agency, by 2020 almost 40% of world oil production will come from deepwater regions. So even though it's hard, dangerous, and expensive to operate a drilling rig in a mile or two of ocean water, that is, increasingly, what the oil industry must do if it is to continue supplying its product. That means the cost of oil must continue to go up.
