by Jurgen Brauer, July 2007
Copyright: J. Brauer. No reproduction without permission.

Biologists frequently remind economists that there are limits to growth. This is both true and false.

The value people assign to goods is reflected in the price they are willing and able to pay, and the size of an economy is computed by multiplying the prices paid with the quantities of goods produced. If I steadily consume one apple per day and the price rises from one to two dollars, then my expenditure has doubled, and so has the farmer’s income. Hence the economy has grown. Economists refer to this as nominal growth - growth in name only - because nothing more has actually been produced. The size of the economy is the same (1 apple); only its name tag has changed (a $2 economy instead of a $1 economy). But if I double my daily apple consumption, then at $1 per apple again the total expenditure and income have doubled. But now the growth is real, as economists refer to it, because to still my craving the farmer needed to produce two apples instead of one. The same name-tag - a $2 economy - can mean very different things.

For economists, there is of course a difference in whether we have real growth per person (2 apples, 1 person) or not (2 apples, 2 persons). But in terms of biology, producing 2 apples for 1 person or 1 apple each for 2 persons comes to the same thing. In one case, we have more production to feed the same population, in the other, to feed a larger population. For biologists, it’s all the same, and for this reason it is this real growth - growth in production - that tends to have biologists worried. They argue that unlimited production is simply not physically possible on a finite planet spinning around the sun, and that it is therefore a matter of the simplest logic that there are limits to growth. This is true.

Biologists frequently remind economists that there are limits to growth. This is both true and false.

What some biologists tend to overlook, however, is that people value not only tangible goods whose production necessitates the use of limited natural resources but that people also value intangible services. If the farmer produces an apple in the morning for which I pay him a dollar and provides computer services in the afternoon for which I also pay him a dollar, then the economy has grown in real terms because more has been produced and the extra production - say, the building of a web site - has not used up any extra natural resources. In this sense, the limits to growth idea is false. A culture of materialism will be unsustainable, but a service-oriented culture is sustainable. The crux of the issue then is not economic growth per se, but population growth. More humans, regardless of any services they may want, do need more food and other material resources.

To switch topics, assume now that the world’s population has come to a sustainable balance with earth’s material resources, and for good measure also assume that the world’s population is permitted to grow (more births than deaths) if, and only if, average material resource use per existing person declines sufficiently (that is, reduce, reuse, recycle) to allow an additional person to be born so that total material resource use is unchanged. This is a flight of fancy of course but I want to steer away from the population issue because the topic of economic, rather than biological, limits to economic growth is a game that is played in a completely different ball park.

Economic limits to economic growth revolve around costs and benefits and are very often related to transportation, communication, or other - often government-imposed - limits. There is good reason why major human migration routes tended to follow plains and river valleys, not mountains and seas. When humans did cross mountains and seas, they tended to leave for good and not see their original families and homes ever again. Only the gradual advent of mass transportation and the simultaneous development of air, sea, and land infrastructure has made it possible to move goods and people back and forth with relative ease. The benefits of exchange rise relative to falling costs.

The development of radio, the telegraph, and the telephone each contributed to falling costs of being and staying in touch. Happily, I am old enough to recall the adventure of $4 per minute cross-continental telephone calls - and the limits thereby faced. The purposeful development of science and scholarship, not merely as the leisurely pursuit of private pleasures by wealthy English or French gentlemen as frequently was the case in the 1700s and 1800s, but as a society-wide directed effort of teaching and learning also removed limits to economic growth, so much so that the absence of science today is as inconceivable as the absence of roads, cell phones, and the Internet. Government, it need scarcely be said, can play a useful role in corralling financial, intellectual, and organizational resources to facilitate economic growth. Sadly, when government becomes captured by special interest groups, it fails in this task to promote the welfare of all.