July 21, 2011

Is infinite exponential growth possible?

Infinite growth in energy consumption on a finite planet is impossible. At some point, won't industrial society start crumbling and free trade begin to disintegrate?

No. This is framing the question in the wrong way.

Thinking about this is kind've fun, but a bit misleading. It suggests that very long-term growth in energy consumption/production is a tenet of mainstream economics. This is highly unrealistic. the volume of goods production levels off in a form of the logistics curve. For example, US car sales (cars & light vehicles) plateaued in the 1970's. Homes, steel, appliances and other durable goods have plateaued in the the same way. Like the demographic transition for population growth, resource consumption does not show an infinite exponential pattern. Instead, it follows an S-curve, levelling off at some point.

There's no reason to think exponential growth in energy consumption will continue forever.  Again, resource/commodity consumption follows a gaussian/logistic curve, not an exponential.  And, eventually, use of virgin minerals will decline to zero.  For instance, look at primary iron smelting in the US: it's very low, because scrap recycling has replaced it.

The idea that economic growth requires commodity consumption growth is a red herring, a strawman.

Now, goods aren't the only thing an economy produces. Goods production can flatten out, while services continue to grow indefinitely. We need quite a bit more of things like healthcare, engineering, education, the arts, etc.

Besides this basic problem with this idea, there are a number of lesser problems:

1) growth in goods production could continue indefinitely, if desired: the value of goods is a function of both quantity and quality. For instance, the US car industry is still growing in inflation adjusted dollar terms because they keep adding features: anti-lock brakes, electronic stability control, low-energy tires, etc, etc.

2) Energy efficiency wasn't a priority in a low-energy cost environment - energy efficiency could be increased by 2x-10x in general. growth in energy consumption per unit of hard goods could be eliminated permanently - energy efficiency growth could continue at the rate of growth of goods production for as long as needed for the plateau in point 1.

3) large categories of energy consumption could be eliminated entirely, as a practical matter: cars and most other portable times (electronics, etc) could run entirely on ambient solar power, if necessary (yes, I know, that would be inconvenient - don't get distracted by that - it's a theoretical point which is addressing a very theoretical Original Post). Homes can be made zero-energy.

The fact is that wind, solar and nuclear can provide far more energy than we'll ever need. We have more than enough resources for indefinite economic growth, though I'm not optimistic about preventing some of the terrible consequences of our neglect of the environment, like species extinction and climate change.

Can services really grow indefinitely?

Well, until we had all of the services we needed.  Healthcare is mostly a service rather than a manufactured good: doctors and nurses don't use much energy.  They have to get to work, and the facilities they work in need to be lit and heated, but reading somebody's chart takes little energy. 

It's true that information technology takes energy, but I suspect overall such energy use is relatively small and not growing:  CRTs have been replaced with LCDs, desktops with tablets, etc.  Databases grow in size, but servers get smaller, chips get more efficient, and the electricity to power it all is relatively small.  Similiarly, drug manufacturing takes little energy.  Medical devices such as imaging (MRI, PET, CT, etc) get smaller as they get better, and use less power.  Radiology has moved from silver film to digital imaging, which consumes less energy (and a lot less labor!).

Heck, knowledge workers like doctors and programmers could use a solar powered laptop, and not consume any power at all on a direct, daily basis.

in the end: service would have to comprise essentially the entire economy

On a percentable basis, perhaps, but not on an absolute basis. Everyone would continue to have the same level of goods as they had when production plateaued, and that would work just fine. Think of cars: production levelled off because demand was satisfied. Consumers were happy. There was no deprivation.

Once we are on board that physical resources cannot grow forever, does that impose a restriction for economic activity in general in the long run?

Not at all. Again, we only need a certain level of goods - once we have them, we're fine. Then growth continues for those services we need more of.

Don't services require goods?

Take hospitals, for instance - Much of their goods consumption is related to the activities of daily living: clothing, food, etc. That consumption would take place wherever the patient was.

Arguably some of health care is specialized goods, not services: drugs, medical devices and some treatments. We could spend some time analyzing that, but I'd say the discussion above about goods applies to them: they don't take much energy to manufacture, and their volume is limited - most of healthcare costs are highly skilled services by doctors, nurses, etc.  Ultimately, training & education is people plus IT, and IT is straightforward to make sustainable through efficiency, renewable power and recycled hardware.

Radiology requires some equipment, but that equipment is durable. It doesn't grow so much as change: CT and MRI develop increased speed, resolution, etc. Actually, radiology consumes a lot fewer resources than it did 40 years ago, as it converted from silver-based film to digital imaging.  Improvements in radiology can be described as increased quality: greater imaging speed and resolution, replacement of invasive modalities with imaging,  etc

A striking trend is the movement of patients (and treatment) out of inpatient settings, and into outpatient clinics. Nursing home placement is being reduced, in favor of keeping people in their homes.

On the other hand, there's no question that many services require workplaces. Those workplaces can be made mostly zero-energy (as homes can be made zero-energy with passive house techniques), and the balance of HVAC energy can be from renewables. Emergency transportation can be via PHEV (with small amounts of biofuel or synthetic fuel).

Wouldn't demand for services eventually be satisfied?

Yes, I imagine service growth would eventually end.

A good problem to have.

This, of course, raises a larger question: don't services require a base of hard goods to operate?

Basically.....no. Education requires only people and an IT infrastructure. The same applies to most services.  If we assume population stabilizes, and "goods" stabilize, then the number of computers per person stabilizes as well. They'll just keep on providing services using the same physical amount of equipment, although the equipment quality will probably improve.

Doesn't IT require energy?

Sure, but not much in the grand scheme of things, and PC/tablet/smart phone/server energy consumption are declining even as their functionality increase. Infrastructure investment peaks and then declines - highways, churches, homes, etc. That's why we saw a cathedral building bubble in the late Gothic high period, a railroad bubble in the 1880's, an electrical generation bubble in the 1920's, and an internet bubble in the 1990's. IT infrastructure has already peaked and leveled off.

Is the delivery of services subject to productivity gains?

Sure. A lawyer can spend 4 hours drafting a brief with a pencil, or 2 with a word processor, or 1 with software with canned phrases and automated bibliography. He or she can spend an hour presenting a motion in open court, or 5 minutes filing it online. A doctor can handwrite a radiology report, or word process it, or dictate it into software that automatically transcribes it.

I think the price of services is ultimately included in the price of goods.

Healthcare is partially a corporate cost in the US, but not anywhere else in the world. How is education included in the price of goods?

Is it even possible to have a service only economy?

No - no one is suggesting that .

what you are describing is a paradigm shift? you are talking about optimizing consumption and economic management to some boundary?

I think so.

Replacing fossil fuels with renewables; taxing mineral consumption instead of subsidizing it to reduce mining and increase recycling; moving from consumerism to quality of life; etc, etc.

Pretty conservative stuff for most of my readers, I hope.

Why insist on using the word 'growth'?

Because that's what most people call it. That's what economists call it.

Growth is generally considered to mean "improvement in our daily lives". Why fight that? Why tell people their lives have to get worse, if it isn't true? That will just destroy any hope of communicating to them that we need to make changes in the way we do things.

Tom Murphy, for instance, agrees with this idea, he just prefers to call such growth "development". Google "Exponential Economist Meets Finite Physicist", and look at the epilogue (or search for "development").  He shows that his intuition is out of sync with what's really going on by suggesting that such "development" might be 400 years off, when in fact it's already a big componenent of growth in the US and OECD.

Hasn't manufacturing in the U.S. been exported, along with its energy consumption?

Not really - manufacturing output is as high as ever in the US: planes, trains and automobiles, as well as oil refining, for instance.
You've been misled by the dramatic decline in manufacturing employment, primarily caused by automation and other kinds of improvements in labor productivity. For instance, the labor required to assemble a car (the majority of which are still made in the US, though some plants are owned by foreign auto companies) is dramatically lower than it was 40 years ago. For that reason, the UAW is much smaller. Of course, anti-union transplant auto plants in the South haven't helped the UAW either...

Don't all economists favor perpetual growth?
No, they favor growth until everyone has everything they need, as discussed above.

Biologists know that exponential growth always ends in collapse.

No, they don’t. There are many possibilities that happen in the wild. Collapse happens sometimes, and sometimes population levels fluctuate/oscillate around an average level. Sometimes growth ends in a plateau. I suspect collapse is the exception.
What about species extinction and Climate Change?

I've been  talking about commodity & energy supply related limits to growth.

You're talking about environmental damage (caused by over predation, habitat loss, and GHG pollution). I agree that environmental damage is an enormous problem and risk, but it is different.
In fact, it's in large part because I believe that Climate Change is an enormous problem that I spend time correcting myths like the danger of exponential growth - Climate Change deniers love it when people say that civilization depends on fossil fuels, and they love it when environmental activists discredit themselves by saying that saving our environment depends on destroying our economy.

Don't reinforce Koch talking points...

3 comments:

Anonymous said...

Its a moot question. We are already in overshoot.

Nick G said...

See my next post.

phil harris said...

Exponential potential?
Air travel?
Tourism?