We have relied on economic growth for the "development" of the world's poorest economies; without growth, we must seriously entertain the possibility that hundreds of millions -- perhaps billions -- of people will never achieve even a rudimentary version of the consumer lifestyle enjoyed by people in the world's industrialized nations.
Finally, we have created monetary and financial systems that require growth. As long as the economy is growing, more money and credit are available, expectations are high, people buy more goods, businesses take out more loans, and interest on existing loans can easily be repaid. But if more new money stops entering this system of ours ( as is the case when growth is stalled ), the interest on existing loans cannot be paid. Then, as a result, defaults snowball, jobs are lost, incomes fall, and consumer spending contracts -- which leads businesses to take out fewer loans, causing still less new money to enter the economy. This is a self-reinforcing, and destructive, feedback loop that is very difficult to stop once it gets going.
In other words, today's economy has no "stable" or "neutral" setting: there is only growth or contraction. And "contraction" is just a nicer name for Depression -- a long period of cascading job losses, foreclosures, defaults, and bankruptcies.
We have become so accustomed to growth that it's hard for some to understand that historically it's a fairly recent phenomenon.
During the past few millennia, as empires rose and fell, local economies advanced and retreated--but world economic activity expanded only slowly, and with periodic reversals.
However, with the fossil fuel revolution of the past two centuries, we have seen growth at a speed and scale unprecedented in all of human history. We harnessed the prodigious energies of coal, oil, and natural gas to build and operate millions of cars, trucks, highways, airports, airplanes, and electric grids -- all the essential features of modern industrial society. But keep in mind that we did this through the one-time-only process of extracting and burning hundreds of millions of years-worth of what is, essentially, chemically-stored sunlight . And by this means we built what appeared to be (for a brief, shining moment) a perpetual-growth machine. We learned to take for granted what was in fact an extraordinary and historically anomalous situation. It became, for us, normal. A given. And now we must learn that it can no longer be 'normal.' So, as the era of cheap, abundant fossil fuels comes to an end, our assumptions about continued expansion and growth will necessarily be shaken to their core.
The end of economic growth means not just the end of an era, but an end to our current ways of organizing economies, politics, and daily life. Without growth, we will have to some major extent reinvent society and even civilization.
If we have in fact reached the end of the era of fossil-fuel-based economic expansion, then efforts by policy makers to continue pursuing ever more elusive growth really amount to a flight from reality. World leaders, if they remain deluded about our actual situation, are likely to delay putting in place the support services that can make life in a non-growing economy survivable for one and all -- they will then almost certainly fail to make needed, fundamental changes to monetary, financial, food, and transport systems.
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