I hear and read over and over again that we have an economy based on infinite growth in a finite world. One common refrain goes something like this: “an economy based on infinite growth is unsustainable.” I have even been “assaulted” by this phrase while listening too and attending a concert by one of my favorite current bands: “Muse.”
The logic is of course partially correct; everything we know if finite. I believe in an infinite God but I cannot logically explain that belief- I accept it on faith. So it is easy to say something is finite on logic alone. Our economy is certainly based on energy and there is a fixed amount of energy- even the sun will stop burning someday. One of the most common applications of this logic applies to our use of fossil fuels. We use oil, coal and natural gas to provide most of our energy and there are fixed amounts of these natural resources. The question becomes how much of these resources do we have and what are the best way to distribute these resources.
Peak oil is one theory used to try to predict when we will reach a peak in oil production and when we will run out. M. King Hubbert, the author of the theory predicted in 1974 that we would reach this peak in production in 1995. This did not happen, from wikipedia:
M. King Hubbert initially predicted in 1974 that peak oil would occur in 1995 “if current trends continue.” However, in the late 1970s and early 1980s, global oil consumption actually dropped (due to the shift to energy-efficient cars, the shift to electricity and natural gas for heating, and other factors), then rebounded to a lower level of growth in the mid 1980s. Thus oil production did not peak in 1995, and has climbed to more than double the rate initially projected.
History is littered with very smart people predicting all kinds of things that turned out to be completely wrong. The most basic reason for this is we can’t know what we don’t know. It was unthinkable in 1974 that oil consumption would drop in a few short years and then go to more stable growth. It was unforeseeable how good engineers would become at finding more of it and finding unconventional ways to get it. Some other very smart informed scientists and oil men believe we have only scratched the surface of oil production and that we won’t run out for perhaps hundreds of years. But these men, just like the men who claimed we are running out now; can’t know what they don’t know.
So where are we now? Oil production is still increasing but so is demand. We can now drill horizontally using new technology- and old technology in new ways such as the much maligned and misunderstood hydraulic fracturing. We can get oil from tar sands and shale rock. In fact it is now estimated that only 30% of oil reserves are the conventional oil we currently rely on heavily. We also have learned to make cars, homes and factories much more energy efficient. I drive a large car (VW Passat) that gets 40MPG easily, in 1974 an equivalent car may have gotten 15 at best.
Natural gas production has skyrocketed and is one of the few things keeping manufacturing in the United States from contracting. Natural gas can be used to power cars and is already used in many municipal car fleets and mass transit vehicles.
It is ironic that the use of natural gas in the United States is responsible for the majority of the reduction in CO2 emission since 2007. Coal emissions went down as it was replaced by natural gas which was made economically viable by the fracking that environmentalist love to hate. Windmills and solar panels that are so in favor and heavily subsidized by government had little overall effect.
Back to growth. Capitalism and globalism are good things, as we grow in the 1st world the third world grows with us. 20 years ago cell phones were expensive and bulky devices mostly used by wealthy businessmen. My Dad had one that was the size of a small briefcase and it could only be used for work emergencies. Fast forward to today and one of the fastest growing cell phone markets is third world Africa. Shanties are built with solar panels to charge cell phones in places that land line service never reached. A cell phone may allow a poor woman to get more work as she can now communicate quickly and easily and find opportunities to earn money. The wealthy businessman with a mobile in 1986 wasn’t thinking about the poor sub Saharan woman- but by buying and using the technology he made it cheaper and better and eventually almost everyone can afford to use it. Much of the anti capitalist rhetoric presents a false premise that markets are a zero sum game. Our “excessive” consumption leads to the deprivation of someone else is the theory. The reality is that our consumption and desire for a better life allows for more abundance everywhere. As our standard of living increases in real terms so does that of the extremely poor. Growth is good for all and capitalism is the engine of growth in the world. Free markets and simple rule of law lead to prosperity wherever they occur.
We will have to consider our sources of energy and continue to make everything more efficient and find better cleaner ways to power our world. We will also have to continue to consider other resources like food and water as the world gets more populated and people live longer we will need more of everything. Capitalism has proven to be the answer to these problems again and again. Markets allow people to make choices based on costs and ration their needs. A truly free market will continue to produce the most abundance of resources and it will not discount the future for the present either.
Some may say that we have enough things in the modern world and are overly consumeristic. I agree but growth isn’t the problem and neither is capitalism in general. Many people in the world are still living in extreme poverty and growth can and will lift them up also as it has lifted the modern world. Capitalism isn’t perfect and life can be unfair but it is still the best system with which to manage our scarse resources and plan a better more abundant and fair world.