The idea of growth


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SPARK Lecture at IUCAA in Pune.

Can perpetual growth be created in a closed system? Can technology, politics or markets make perpetual growth happen? What happens when growth is unconstrained? Can growth be uneconomic? Is the pursuit of growth as an end the sign of a purposeless society?

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The idea of growth

  1. 1. The idea of Growth Anupam Saraph, PhD Future Designer and Professor of Systems and Decision Sciences Dedicated to Nicholas Goergescu Roegen, Malcolm Slesser and all those anonymous humans striving to improve the pulse of the world
  2. 2. The growth game • Every jump is a unit of revenue • Every time I say start, you will jump till I say stop • Every time I say stop, note the units you got since the last start; calculate the growth rate in your revenues
  3. 3. The growth game • Why did you peak off? • Why did your growth rate go to zero or even negative?
  4. 4. The growth game • Innovate to continue growth • When you are ready we will try your new growth strategy
  5. 5. The growth game • What was the maximum achievable growth in both scenarios? • What was the global growth in both scenarios?
  6. 6. revenue revenue target desired growth rate resources(+) (-) carrying capacity
  7. 7. 100 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 Time YAxis Resources Population Carrying Capacity Deficit Overshoot and Collapse Revenue
  8. 8. Growth with doubled resources
  9. 9. Slower growth rates
  10. 10. The Resource Consumption Scenario  Some resources like water are becoming fast inaccessible and inadequate.  Some resources like oil have gone past their peak production.  There is an energy shortfall of 17 - 20 TW.  Building 1 1000 MW nuclear plant/day for 50 years would give 10 TW, Wind offers 2-4 TW , Solar offers 20, Biomass has 7-10 theoretical maximum.  In 2002, the Food and Agriculture Organization of the UN estimated that 75 percent of the world’s oceanic fisheries were fished at or beyond capacity. The North Atlantic cod fishery, fished sustainably for hundreds of years, has collapsed, and the species may have been pushed to biological extinction.
  11. 11.  Growth is an increase in some quantity over time.  Growth is not Development. Development is to become more mature, elaborate.  Growth by itself does not sustain that which grows, in fact it can destroy it.  Growth is by itself neither good nor bad. It depends on what is growing and when. Nothing grows forever.  Not all growth is economic.  Uncontrolled growth uneconomic; it is often called cancer.  The dynamics of uncontrolled growth eventually results in an overshoot and then a collapse. Growth
  12. 12. When the costs of growth exceed the benefits of growth, growth is uneconomic. Uneconomic growth Depletes a resource that is more expensive than the revenue earned or that generates more harm than the revenue earned. Erodes the carrying capacity. Can continue by parasitic resource use. Uneconomic growth
  13. 13. The Pollution Scenario  Some pollutants like carbon di-oxide have not be reduced by technology, political or market solutions over the last 20 years.  Sea level has risen 10–20 cm since 1900. Most non-polar glaciers are retreating, and the extent and thickness of Arctic sea ice is decreasing in summer.  The first global assessment of soil loss, based on studies of hundreds of experts, found that 38 percent, or nearly 1.4 billion acres, of currently used agricultural land has been degraded.
  14. 14. CO2 Concentration
  15. 15. To overshoot means to go too far, to grow so large so quickly that limits are exceeded. When an overshoot occurs, it induces stresses that begin to slow and stop growth. The cause for overshoot and collapse are always the same First, there is growth, acceleration, rapid change. Second, the growth drives a depletion of some resource required for the growth or an increase in some resource that harms the growth. Third this dynamics causes a contraction, deceleration or decay resulting in a collapse. Overshoot and collapse
  16. 16. We Live in an Growth Era Source: Alan Atkisson and Junko Edahiro, Life Beyond Growth, ISIS Academy 2012
  17. 17. “The closed economy of the future might similarly be called the 'spaceman' economy, in which the earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which, therefore, man must find his place in a cyclical ecological system” - Kenneth Boulding 1879: Henry George, Progress and Poverty 1965, Adlai Stevenson in the UN 1966, Barbara Ward, Spaceship Earth 1966, Kenneth Boulding, The Economics of the Coming Spaceship Earth 1968, Buckminister Fuller, Operating Manual for Spaceship Earth 1971, U. Thant in the UN Spaceship Earth
  18. 18. In a closed system •Resources and the carrying capacity are finite. •Perpetual growth is impossible. •Uneconomic growth is inevitable. •Unless regulated an overshoot and collapse is the likely scenario. Growth on Spaceship Earth
  19. 19. Nicholas Georgescu Roegen Was a mathematician and economist. He was possibly the first to point out that growth cannot violate the laws of thermodynamics. All growth requires energy.
  20. 20. Malcolm Slesser Was a professor, energy analyst and energy economist. He highlighted that the rate of growth of the global economy was about 2% per anum and has historically never exceeded that. He developed tools to compute the dynamics of growth of national economies and to explore ways to increase their carrying capacity. The maximum rate of growth of the economy cannot exceed the rate at which energy is pumped into the economy.
  21. 21. Donella Meadows was a systems analyst and adjunct professor of Environmental Studies at Dartmouth College. She was the lead author bringing the insight of limits to growth from the study for the Club of Rome to the world. Dennis Meadows has served on the faculties and directed research centers at MIT, Dartmouth College, and the University of New Hampshire. He is President of the Laboratory for Interactive Learning. Has revisited the study in 1992 and 2002 to confirm the findings documented in the 1972 book on limits to growth. Jay Forrester Professor Emeritus at MIT, led the team of researchers who developed the World model for the Club of Rome to explore the dynamics of growth in a finite world.
  22. 22. Technology cannot yield perpetual growth  Energy expansion has been no more than 2% per anum.  World GDP has also matched the energy growth.  Technology requires energy. Rapid replacement of existing capital with alternate energy or energy efficient capital drives limited energy away from other requirements of the economy, limiting the rate at which this is practicable.  GDP Growth rates of various countries reflect their ability to control resources (through wars, ownership or trade) and (failure to) offset the impact of pollution.  Fifty-four nations experienced declines in per capita GDP for more than a decade during the period 1990–2001.
  23. 23. Energy production refers to forms of primary energy--petroleum (crude oil, natural gas liquids, and oil from nonconventional sources), natural gas, solid fuels (coal, lignite, and other derived fuels), and combustible renewables and waste--and primary electricity, all converted into oil equivalents. International Energy Agency (IEA Statistics © OECD/IEA, Energy production (kt of oil equivalent)
  24. 24. GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in constant 2000 U.S. dollars. Dollar figures for GDP are converted from domestic currencies using 2000 official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used. World Bank national accounts data, and OECD National Accounts data files. GDP (constant 2000 US$)
  25. 25. GDP Growth 2000-2010 Annual percentage growth rate of GDP at market prices based on constant local currency. Aggregates are based on constant 2000 U.S. dollars. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. World Bank national accounts data, and OECD National Accounts data files.
  26. 26. Energy use, (kt of oil equivalent) Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuel supplied to ships and aircraft engaged in international transport.
  27. 27. Energy imports, net (% of energy use) Net energy imports are estimated as energy use less production, both measured in oil equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy before transformation to other end- use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.
  28. 28. Politics and Markets do not create perpetual growth  Failure to build informational, social, and institutional mechanisms to keep in check the positive feedback loops that cause exponential population.  Mounting debt and paper “wealth” drive politics and markets.  The richest one- fifth of the world’s population has 85 percent of the global GNP. In 1998 more than 45 percent of the globe’s people had to live on incomes averaging $2 a day or less. And the gap between rich and poor is widening.
  29. 29.  Deterioration in renewable resources - surface and ground water, forests, fisheries, agricultural land.  Rising levels of pollution.  Growing demands for capital, resources, and labor by military and industry to secure, process, and defend resources.  Investment in human resources (education, shelter, health care) postponed in order to provide immediate consumption and security demands.  Rising debt; eroding goals for health and environment.  Growing instability in natural ecosystems.  Growing gap between rich and poor - between the powerful and the weak. Meadows, et. al. pp 176-177. Some Indicators of Overshoot
  30. 30. Human beings and the natural world are on a collision course. Human activities inflict harsh and often irreversible damage on the environment and on critical resources. If not checked, many of our current practices put at serious risk the future that we wish for human society and the plant and animal kingdoms, and may so alter the living world that it will be unable to sustain life in the manner that we know. Fundamental changes are urgent if we are to avoid the collision our present course will bring about. World Scientists’ Warning to Humanity signed by more than 1,600 scientists, including 102 Nobel laureates, from 70 countries, 1992 Some Indicators of Overshoot
  31. 31. The idea of growth  Growth in a closed system is not perpetual  Technology, markets or politics cannot create perpetual growth  Growth has overshot the carrying capacity when it becomes uneconomic  Growth as an end is the pursuit of a purposeless society