economic growth

The economic activities that comprise an economy involve taking natural resources from the Earth and its environments and converting them into the products of that economy. Excessive and unsustainable use of these natural resources is causing or exacerbating many of the issues that the Earth and humanity face.


The amount of resources that the Earth can provide for us and the rate at which we can use them is limited. If an economy uses resources at an unsustainable rate those resources will become unobtainable, economic activity will cease, and the economy will collapse.


As there is a direct and relatively fixed relationship between the size of an economy and the amount of resources that it consumes, this limit on the availability of resources means that there is a limit to how large an economy can grow.


An economy that reaches the limit of the resources that it can obtain from within its boundaries can import the resources that it needs; but, nearly all economies are part of the global economy, and the global economy has nowhere else to import resources from. If the global economy uses global resources at a rate which is beyond that which can be sustained, it will collapse. Currently, the global economy is using resources at a rate that is about one-and-a-half times the sustainable rate.


It may seem that we are managing with the amount of resources that we use now, and that there are still plenty of resources to keep our economies going for the foreseeable future; however, there are two reasons why this is not so. One reason is that we are already using many resources at an unsustainable rate, so we won't be able to continue to use them, even at the current rate, forever. The other reason is that our economies have to grow; the need to grow is a fundamental, structural part of the way modern economies work. As our economies grow, the rate at which we use resources must grow with them.

growing exponentially

Not only do modern economies have to grow, but they have to grow exponentially; that is, they must grow repeatedly by the same proportion rather than grow repeatedly by the same amount. The outcome of exponential growth isn't intuitive, and it's very surprising. Exponential growth produces huge size unexpectedly quickly, with most of the growth happening very quickly at the very end of the process.


When something grows exponentially it doubles in size in a regular period. The global economy is growing at around 3.5% per year, which means that it doubles in size around every 20 years. An attribute of exponential growth is that the growth that happens in one doubling period is equal to all the growth that has ever happened before. This means that the growth in economic activity that will happen in the next 20 years will be equal to the all of the economic activity that has ever happened before, and that, therefore, the amount of resources that will be used in the next twenty years will be equal to all of the resources that have ever been used  by humanity's economic activities.



The global economy is already using resources at a rate that is greater that what the Earth can sustain, and yet it must double in size in the next twenty years, and then quadruple in forty years – this is the fundamental problem of economic growth. That economic growth is part of the structure of modern economies of modern economies, which they must have to function.  This is why resolving the issues that the Earth and humanity face will be difficult or impossible without fundamental changes to our economic system to remove the need for growth.


Write a comment

Comments: 0