Five Tools for Going Forward

Paul Seabright

Twenty years after The Limits to Growth comes the sequel. It’s a hard act to follow: the original sold nine million copies and made its authors and backers, the so-called Club of Rome, famous with its prophecy that the comfortable optimism of the Sixties was threatened by a combination of population growth, resource exhaustion and the effluents produced by affluence. The authors used a large computer model to project economic and demographic trends, and predicted a collapse of living standards by the middle of the 21st century unless dramatic changes were made. A decade after the Cuba missile crisis, a world that was learning to live with the superpower confrontation reacted in alarm to the warning that a population explosion would be no less deadly than that of the ICBMs, and much harder to control. Some pessimists even derived a certain lugubrious pleasure from thinking the baby boom more inevitable and more damaging than the atomic kind. Demographic warfare differs from the traditional sort in that going nuclear usually signals de-escalation. But the authors warned that slowing the birth rate (did they choose the title Club of Rome deliberately?) would be nothing like enough to avoid calamity. At any foreseeable stable population level, even existing consumption trends would exhaust the world’s resources and pollute its environment beyond repair.

Some of the messages of The Limits to Growth would hardly be thought controversial today. Environmental concern is now entirely respectable: indeed it forms an increasing part of the activities of such institutions as the World Bank and attracts any amount of celebrity endorsement. Many of its terms of art have entered everyday usage: the distinction between renewable resources, like forests, and non-renewable ones, like oil, is familiar to most non-specialists. That not all environmental problems can be left to the good sense of individual countries to sort out has also become evident, particularly where global warming and the ozone layer are concerned; and the Montreal Protocol on chlorofluorocarbon emissions has been an encouraging sign of the world community’s ability to respond collectively if a problem is sufficiently pressing (the story is well documented here). In some ways, too, the authors’ methodology has become more acceptable. Large-scale computer modelling is now commonplace, and the familiarity of chaos theory has meant that the sensitivity of a model’s predictions to initial conditions is no longer considered to its discredit. This is just as well, since the graph in which the authors superimpose all their projections of national income under different assumptions looks like a fan made out of spaghetti. On the other hand, as the authors implicitly acknowledge, many of the views they held twenty years ago seem simplistic today (some did so even then). In particular, the ease with which resource scarcity can lead to substitution has been strikingly apparent, both in the conservation measures initiated after the 1973 oil crisis and in the development of synthetic substitutes for many natural products. The exhaustion of a natural resource cannot, after all, leave us worse-off than we were before its original discovery. Wilfred Beckerman once pointed out that the world had survived remarkably well in the absence of Beckermonium, a mineral named after an ancestor of his who failed to discover it in the 19th century.

The central theme common to this and the earlier book is the nature of the limits to the Earth’s capacity to sustain life and economic activity. That there are such limits is an obvious, indeed banal point. But the authors claim that these limits have two important properties: first, if we run up against them sufficiently hard the consequence will be a complete collapse of our capacity to survive, and second, that our decentralised warning mechanisms (for example, the tendency of prices to rise as a resource becomes scarce) will not enable us to avoid such collapse – rather as a supertanker will be doomed if it relies on a human lookout rather than on radar to warn of the approach of the harbour wall.

The role of radar in this argument is played by a large computer model of the world, its population and resources. These resources are of two kinds: sources and sinks, those we can extract and use and those into which we can dump our waste. That some of the world’s resource limits have the two properties (of striking back and of being unresponsive to economic signals until too late) is not in dispute: the ozone layer is the most obvious example. The authors’ model derives its character from the assumption that the sum of the world’s resources can be approximately modelled as a single resource having both properties.

Thirteen different projections are made of future world consumption, production, pollution and demographic patterns over the next century or so. The purpose of running so many projections is to see the extent to which the model’s qualitative predictions are sensitive to its quantitative assumptions (its parameters, in the jargon). And indeed, the authors find that almost all their projections involve levels of population and income that overshoot sustainable limits before either collapsing or settling down again to tolerable levels, and begin their decline anywhere between the end of this century and the middle of the next. The greater the initial overshoot, the greater the eventual retrenchment. The only exceptions are the utopian case in which there are no resource constraints at all, and the case in which resource constraints are sufficiently loose, and the political will exists to make an immediate transition to sustainable income levels. This second case involves aiming at average world incomes somewhere around those of present-day South Korea, a level sustainable ‘for at least the whole of the 21st century’, which is the end-date of the book’s projections.

Something in the way the authors qualify this claim about sustainability should give us pause. To say that income levels are sustainable for at least the whole of the 21st century does not mean they are sustainable indefinitely. There is an important sense in which the authors’ very scrupulousness in testing the sensitivity of their model to changes in its quantitative parameters may make us overlook the fact that its qualitative assumptions are hardly subjected to scrutiny at all. This is like a manufacturer claiming that his jojoba-cardamom-and-asses-yogurt rejuvenating thigh balm damages the environment less than using the phosphate-intensive-but-admittedly-half-the-price brand X, without mentioning that not using thigh balm at all would damage the environment even less. The authors don’t publish here equations of their model, but it seems clear from their graphs that all of its projections assume that the sum of the world’s resources is ultimately non-renewable. To put it another way, renewable resources cannot substitute completely for all of the non-renewable resources essential in production, and when those non-renewable resources eventually run out, as some day they must, world production and income will decline to zero. This assumption has the profound implication that no parameters of the model could ever generate a truly sustainable outcome, meaning one in which income levels could persist indefinitely. Income and population would always decline sooner or later to zero. If that is the case, it becomes much less clear why we should be attracted by a policy that has the decline beginning early in the 22nd century rather than at any other date.

The dilemma, then, is this. If there are essential (non-substitutable) and non-renewable resources, world income and population will eventually decline to zero,[*] and it is largely a matter of taste how fast or slowly we wish to approach this end-point. If, as seems overwhelmingly more likely, all resources are renewable, or have renewable substitutes, or are not essential to production, then the model used in this book will not tell us how best we should use these resources. In particular, the quite reasonable claim that there is a limit to the sustainable rate of utilisation of the world’s resources (which is a claim about certain physical quantities) does not imply that there is a limit to the levels of income that can be derived from them (which is a claim about levels of welfare). Still less does it imply that income must remain at some particular level, such as that of present-day South Korea.

None of this is to deny the important truth that reaching sustainable levels of resource use is something that cannot be left entirely to markets, or other forms of decentralised decision-making, although markets will always have a crucial role to play. The implications of this have led to a great deal of work in environmental economics, which can be thought of as the study of those decision-making mechanisms needed to attain sustainable resource use. Environmental economics, one might say, has become a growth industry. In addition, important work has been done in exploring what constraints there might be on our ability to derive an increasing standard of living from sustainable rates of resource use. One pioneering work in this area was Fred Hirsch’s Social Limits to Growth, which pointed out that many of the most important sources of human welfare are intrinsically limited by the fact that increasing their availability to one person automatically reduces their availability to another. Some human desires, like the desire for uncrowded beaches or the inexplicable craving to become a Member of Parliament, are constrained by the total available beach space or the number of seats to be contested; others, like the desire for esteem in the community, to have power over others or to be heavyweight champion of the world, are constrained by the fact that some people have to lack esteem, power or champion status for others to be able to possess it. Indeed, it is an interesting question how many of the first kind of good may turn out on closer inspection to contain elements of the second: would we value uncrowded beaches as much if even the hoi polloi could afford them? Would seats in Parliament be as highly prized if there were six million of them? The prospects for growth in our capacity to provide the things we care about are limited by the vanity of human wishes in every sense of that phrase.

Unless all the sources of human welfare above a certain minimum turn out to have this character, the fact that there are social constraints on growth does not mean that there is some absolute limit to it. But these constraints are likely to become more and more pervasive features of our lives in years to come. For instance, if an eventual world population of around ten billion is to have a tolerable standard of living, its members will wish to travel. Congestion is currently restrained principally by the fact that most of the world’s population are too poor to travel any significant distance, and most of the travel they do undertake is out of necessity. But even if each of the world’s Christians were to wish to hear the Pope’s Easter message in St Peter’s Square just once in a lifetime, then by the end of the next century that could mean thirty or forty million people vying to attend each year’s address. If each of ten billion people wish to visit Venice merely once in a lifetime, Venice will have nearly two hundred million visitors a year.

These apocalyptic visions are not meant to be taken as literally prefiguring the future. But they do illustrate a phenomenon that is of importance on a much smaller scale. Long before its annual total of tourists reached two hundred million a year, Venice would have become irretrievably unlike the Venice that was worth visiting in the first place, and we shall be lucky if the deterioration were objectively measurable in some way that provoked remedial action before it was too late. A few years ago, the authorities responsible for the maintenance of the great caves at Lascaux in Southwest France became aware that atmospheric changes due to the numbers of visitors were causing the prehistoric paintings to deteriorate. They therefore built a remarkable replica of the caves on a nearby site; it is this replica that most visitors now see. It is possible to visit the real caves, but you have to write to the curator, giving reasons – a small number of scholars and other ‘deserving’ visitors are granted access every year.

The Lascaux example is interesting precisely because it is a solution to the problem that would be impractical on a much larger scale: replicas of Venice are unlikely to be built. It is evident that there will be many restrictions on our lives in the future (and in particular, on our freedom to travel) that we have not been used to in the past. Greater affluence will remove some of the constraints of material poverty, and replace them with administrative constraints of a kind required to prevent congestion from becoming unmanageable. One way to see this is as an expansion of private into public space. It will no longer be possible just to walk (let alone drive) into the streets of Venice or Florence; we shall have to request admission as at the door of a private house. This may seem like a retrograde step, a return to a Medieval conception of the city state, and a restriction on our freedom where none existed before. But this reaction should be tempered by the reflection that the streets of Venice and Florence have so far been protected (albeit incompletely) from congestion by the material poverty that has prevented the great majority of their potential visitors from ever aspiring to set foot in them.

Beyond the Limits gives us little clue as to how an adjustment to these difficult realities is to be achieved – should visas for Venice he auctioned to the highest bidder, for example? Its concluding chapters give more than a hint that the answer is to be found in hairshirt morality rather than institutions: ‘We have learned the hard way that it is difficult to live a life of material moderation within a social system that expects and values consumption,’ the authors write, and propose instead ‘visioning, networking, truth-telling, learning and loving’ as ‘five tools for going forward’. Solutions to the problems of global warming and ozone depletion will certainly require vision, networking and so on, but they will also need to be detailed and institutional, in the sense of depending on systems of incentives for their enforcement rather than exclusively on appeals to public spirit. Where markets work reasonably well (as in pricing exhaustible resources for which there are clear and enforceable property rights) it would be wise to use them, keeping our powder dry for those problems where markets fail: typically, where property rights are poorly defined and where individuals acting selfishly have serious effects on the rest of us – as in the case of forests, fisheries or the atmosphere. When the next sequel to The Limits to Growth is written, it would be good to hear a little more about these details.

This is no mere pedantry. Instead of a careful working-out of solutions to particular environmental problems, Beyond the Limits offers us a vision of Armageddon and a generalised injunction to self-denial. In the aftermath of the Rio Summit it is as well to be reminded just whom this self-denial will hurt. Rio was only partly about the environment; it was also about the fears of the wrold’s poor countries that the rest of us have a vested interest in their remaining poor. Economic growth has unpleasant side-effects which, once recognised, can be substantially alleviated, especially if they are addressed with rigour and care. Their alleviation will require some measures (like taxing fossil fuels and phasing out CFCs) that will hurt – and will particuarly hurt those of us whose lifestyles consume these substances in large quantities. But to confuse this message with the undesirability of growth per se it to risk prolonging unneccessarily the severe poverty in which more than a billion of the world’s people live today.

[*] This is not strictly correct. It is theoretically possible for the rate at which output is produced from given resources to increase fast enough to offset for ever the declining levels of those resources. But to do so it would have to increase at an accelerating rate, and this model – like most sensible ones – assumes that the more efficiently a given resource is utilised, the harder it is to make further efficiency improvements.