by Brian Czech
Birgitta Jansen’s “Greening Of America” (September’s Desert Report) was incredibly insightful and aptly alarming. And, as she described the environmental challenges of industrial solar developments, wind turbines, and deep-sea mining, we could see the economy sprawling between the lines. My job is to take the baton from between the lines and bring it to a macroeconomic finish. Specifically, I’m here to explain the sustainable option in broad economic policy terms. It’s called the “steady state economy.”
When pondering the meaning of “steady state economy,” it helps to remind ourselves exactly what economic growth is, starting with what it is not. Economic growth is not mom, apple pie, or Chevrolet. It’s not even synonymous with more jobs. (Far too many other factors come into play, such as robots “stealing” our jobs and CEOs hogging income.) Economic growth is not, in other words, a harbinger of economic or social welfare.
Economic growth is simply an increase in the production and consumption of goods and services in the aggregate. It requires a growing population and/or per capita consumption. It’s measured with GDP, or gross domestic product. Technically, that’s all it is! Attitudinally, it’s materialism writ large. Politically, it’s a central economic policy of the USA, pursuant to the antiquated Full Employment and Balanced Growth Act of 1978.
Now it’s apparent that we have three major alternatives: growth, de-growth, and a steady state economy. De-growth, then, means a decrease in production and consumption (in the aggregate), a declining population and or/per capita consumption, and a shrinking GDP. As unsustainable as growth is, it also doesn’t take long to recognize that neither is de-growth is hardly a paragon of sustainability.
This leaves the steady state economy as the one sustainable option. The steady state economy is a stabilized level of production and consumption, entailing a stabilized population and per capita consumption. “Stabilized” is not the same as flatlined. Rather, the steady state economy fluctuates to some degree with changes in the weather, resource trends, and regulations such as environmental protection. A “nice” steady state economy fluctuates mildly, and ideally at some optimum level, keeping the (mildly fluctuating) population happy.
The phrase “in the aggregate” also warrants careful attention. Economic growth doesn’t amount to more apples here with less oranges there. What we’re interested in is the size and weight of the shopping cart, not so much the contents therein. This is a key concept to remember, because it helps to dispel the fallacious notions of “green growth.” Just because solar panels are starting to replace fossil fuels doesn’t necessarily make for growth, much less “green.” In fact, degrowth is almost certainly on the horizon as we phase out of fossil fuels. Even the attempts to grow the economy “greenly” will result in the degradation described by Jansen. What’s pitched as “green growth” is better described as non-green non-growth.
Circular Flows in a Triangular Economy
We hear a lot these days about the “circular economy,” with total reuse and recycling of our material goods. This concept arises from the noble motive of preventing waste, halting pollution, and making an economy sustainable. Unfortunately, it’s also often coupled with the oxymoron of “green growth.” Supposedly, once we figure out how to “circularize” the economic process, we can turn our attention to an ever greater circular flow. While the motive is noble, the concept is dangerous when extended to macroeconomic policy goals. Thinking we could become entirely efficient in the economic production process would be to violate the second law of thermodynamics, the entropy law.
Without plumbing the depths of entropy in physical or mathematical terms, let’s go straight to what it means for sustainability: We can never become 100% efficient in the production process. In the production and consumption of goods and services, there will be waste: wasted material (pollutants, in other words) and energy (typically in the form of heat). In terms of physics, all this waste can be lumped with the term “entropy.” We try to fight it off with recycling, insulation, and smart industrial design in general, but entropy increases at every step.
Even if we could become entirely efficient, that doesn’t mean we could have perpetual growth. We’d still need to increase inputs to procure additional outputs. There’s no making something from nothing; that’s the first law of thermodynamics. “No free lunch,” we might say.
So, rather than a circular pie in the sky, it’s more accurate to think in terms of a “triangular economy,” firmly planted right here on Earth. The triangular economy should resonate with most readers because it’s based on very simple ecological principles that are witnessed every day. The triangle starts at the base with producers, and proceeds upward into consumers. In nature, or the “economy of nature,” the base of the triangle consists of plants. They produce their own food in the process of photosynthesis. Moving up the triangle, the next organisms we encounter are the primary consumers. These are the animals that eat plants directly, such as rabbits, cows, and (for the most part) geese. Moving up further still, we have the secondary consumers that eat primary consumers. These include predators such as snakes, eagles, and wolves. Technically, the secondary consumers also include scavengers such as the California Condor.
Why is this collection of species “shaped” like a triangle and not, for example, a rectangle or an octagon? Well, you’ve just encountered the second law of thermodynamics in action! In economic terms, the second law establishes that there is no such thing as 100% efficiency in the transformation of matter and energy. That’s why we cannot get (thankfully perhaps) a million tons of geese from a million tons of grass. In fact, there is a handy little rule of thumb that tells us roughly ten percent of biomass gets converted from one trophic level to the next. A million tons of grass might get us a hundred thousand tons of geese.
The economy of nature is triangular; so is the human economy.
For the non-ecologist out there, you’ve picked up yet another term: “trophic levels.” The three major trophic levels in the economy of nature are producers, primary consumers, and secondary consumers. Of course, if you drill down into the life-history details, you’ll find that numerous species don’t adhere strictly to these levels. Humans and bears are excellent examples. They are classic omnivores that occupy an intermediate level overlapping primary and secondary consumers.
The human economy also has a trophic structure. Once again it makes perfect sense to recognize the three basic levels. However, it helps to modify our labels. We can call the “producer” level the agricultural and extractive sectors. The primary and secondary “consumers” amount to heavy and light manufacturing, respectively. Let’s remember that rule of thumb about proportions, too. It takes a lot of bauxite mining at the trophic base of the economy to smelt aluminum into the ingots. These may then be pressed into sheets, from which blanks may be cut, redrawn, trimmed, and seamed. Materials and energy are lost along the way – that dastardly second law of thermodynamics again.
As for services? They also arise from surplus at the base of the economy. Furthermore, the customers served by these sectors are, for the most part, the producers, manufacturers, and consumers in the trophic structure. In other words, the service sectors are in no way operating independently of the goods sectors. Rather, all these sectors grow as an integrated whole, and only if the trophic base is expanding. That means agriculture, logging, mining, domestic livestock production, and commercial fishing are spreading out into the landscape and/or intensifying in place. Whether spreading or intensifying, they are modifying, usurping, or destroying the wildlife habitats that preceded them.
Technological progress is one of the trickiest aspects in thinking about limits to growth. But, we’re already halfway there by recognizing the triangularity – as opposed to the circularity – of the economy. We’ve addressed the basic concept of efficiency as we move from one trophic level up to the next in the production process. We know we cannot get 100% efficient in the production process, but how about getting a lot more efficient than we are now, at least?
In economic terms, technological progress is best described as increasing output per unit input; increasing productive efficiency, in other words. The big hope of technological progress is why policy makers, especially at the federal level, are often keen to fund research and development (R&D) institutions and programs. Yet even though our annual R&D expenditures are into the hundreds of billions of dollars, our environmental problems our worsening.
To understand why all this R&D isn’t solving the environmental problem, we have to ask ourselves: How does R&D occur? For one thing, it must be financed. Almost all R&D is conducted by corporations and government. For corporations, this means profits are required if there is to be R&D. Only after wages, rents, and interest on loans are paid off, and dividends distributed, is there money available for other things, and some of the money might be allocated toward R&D.
Meanwhile, as all economists know, profits dry up in a competitive economy except for the firm that maintains a competitive advantage. How is such an advantage maintained? The stock answer is “technological progress.” But now we’ve reached a catch-22: We need the profits to maintain the R&D, but we need the R&D to maintain the profits. What gives?
As I described in my book Supply Shock, the way out of this catch-22 is called “economies of scale.” Economies of scale provide the other approach (in addition to technological progress) to productive efficiency gains. The salient point, though, is that economies of scale, by definition, refers to the increase in efficiency stemming from an expansion of operations based upon the current level of technology.
In other words, we had to cause more of the environmental damage caused by current technology in order to fund the R&D that we hoped would solve the problem. And as it turns out, much of the new technology brought to bear is actually used for exploring and extracting resources from places we couldn’t access before.
Once again, there is no free lunch. Not even at the R&D table – in fact, especially at the R&D table, where efficiency gains are getting harder to come by, and/or more expensive by the year.
Government R&D is subject to the same catch-22 as corporate R&D, because public coffers are built primarily from taxes on profits and wages. It’s a bit like robbing Peter to pay Paul, with regard to corporation vs. government R&D. (I’ll let you ponder which might be Peter and which might be Paul.)
Big Green and Steady Statesmanship
Talking about limits to growth as a government scientist, or any type of civil servant, is tough duty. I found this out the hard way with a career plagued by gag orders in the headquarters of the U.S. Fish and Wildlife Service (1999-2017). Even though the conflict between economic growth and environmental protection had become my specialty toward the end of my Ph.D. research, I was gradually and then adamantly prohibited from speaking or writing about it. The censorship was doubly frustrating because my job description as the first Conservation Biologist (by that title) in the history of the Fish and Wildlife Service was laden with big-picture, long-term thinking.
It’s easy to see why such censoring occurs, though. Economic growth is still one of the highest priorities of the American politician, especially at the federal level. Presidents and Congresses are geared for growth. They campaign on a platform of growth, seek to achieve it, and don’t look kindly upon those who get in the way. When a lowly civil servant speaks truth to power about limits to growth, political appointees in the middle get scared. Rather than empowering the rare ecological economist in the government, they undermine or muffle him or her. For me, the frustration mounted until I finally quit FWS to run CASSE full time.
For a few short years in FWS, though, there was some potential for raising awareness of the trade-off between growth and conservation. One FWS Director told me, “You get us a policy position [on economic growth] by The Wildlife Society (TWS), and we’ll talk about it.” I and allies eventually succeeded in TWS, as well as in the U.S. Society for Ecological Economics, the American Society of Mammalogists, and the North America Section of the Society for Conservation Biology. Each of these scientific, professional societies have taken positions explaining the “fundamental conflict” between economic growth and environmental protection.
Yet the Director never came around, and in fact became intransigent on the matter, keeping economic growth completely off the table. (In FWS, we literally started calling economic growth “the 800-pound gorilla.”) I believe it would have helped the Director take a different approach if the conservation organizations – Sierra Club, National Wildlife Federation, Defenders of Wildlife, World Wildlife Fund, Friends of the Earth, and others – had developed an educational campaign about limits to growth and the need for a steady state economy. Those organizations had a scientific foundation to stand upon, with the policy positions taken by the scientific, professional societies. They’ve failed us thus far.
It’s never too late, though. “Fantasies of perpetual economic growth,” as Greta Thunberg ridiculed, are looking more foolish by the day. I’m guessing the first organization from Big Green to tell it like it is about the conflict between growth and conservation will instantly be viewed as heroic to an environmental public starved for leadership on limits to growth. I believe such leadership would catch like wildfire, too, because people from all walks of life are starting to sense that sustainability is a steady state economy.