Published on June 28th, 2012 | by Earth Policy Institute2
Economic Sustainability: Two Views to Our Future
By Lester R. Brown
No previous civilization has survived the ongoing destruction of its natural supports. Nor will ours. Yet economists look at the future through a different lens. Relying heavily on economic data to measure progress, they see the near 10-fold growth in the world economy since 1950 and the associated gains in living standards as the crowning achievement of our modern civilization. During this period, income per person worldwide climbed nearly fourfold, boosting living standards to previously unimaginable levels. A century ago, annual growth in the world economy was measured in the billions of dollars. Today, it is measured in the trillions. In the eyes of mainstream economists, our present economic system has not only an illustrious past but also a promising future.
Mainstream economists see the 2008–09 global economic recession and near-collapse of the international financial system as a bump in the road, albeit an unusually big one, before a return to growth as usual. Projections of economic growth, whether by the World Bank, Goldman Sachs, or Deutsche Bank, typically show the global economy expanding by roughly 3 percent a year. At this rate the 2010 economy would easily double in size by 2035. With these projections, economic growth in the decades ahead is more or less an extrapolation of the growth of recent decades.
But natural scientists see that as the world economy expanded some 20-fold over the last century, it has revealed a flaw—a flaw so serious that if it is not corrected it will spell the end of civilization as we know it. At some point, what had been excessive local demands on environmental systems when the economy was small became global in scope.
A study by a team of scientists led by Mathis Wackernagel aggregates the use of the earth’s natural assets, including carbon dioxide overload in the atmosphere, into a single indicator—the ecological footprint. The authors concluded that humanity’s collective demands first surpassed the earth’s regenerative capacity around 1980. By 2007, global demands on the earth’s natural systems exceeded sustainable yields by 50 percent. Stated otherwise, it would take 1.5 Earths to sustain our current consumption. If we use environmental indicators to evaluate our situation, then the global decline of the economy’s natural support systems—the environmental decline that will lead to economic decline and social collapse—is well under way.
What Markets Don’t Tell Us
How did we get into this mess? Our market-based global economy as currently managed is in trouble. The market does many things well. It allocates resources with an efficiency that no central planner could even imagine, much less achieve.
However the market, which sets prices, is not telling us the truth. It is omitting indirect costs that in some cases now dwarf direct costs. Consider gasoline. Pumping oil, refining it into gasoline, and delivering the gas to U.S. service stations may cost, say, $3 per gallon. The indirect costs, including climate change, treatment of respiratory illnesses, oil spills, and the U.S. military presence in the Middle East to ensure access to the oil, total $12 per gallon. Similar calculations can be done for coal.
We delude ourselves with our accounting system. Leaving such huge costs off the books is a formula for bankruptcy. Environmental trends are the lead indicators telling us what lies ahead for the economy and ultimately for society itself. Falling water tables today signal rising food prices tomorrow. Shrinking polar ice sheets are a prelude to falling coastal real estate values.
Beyond this, mainstream economics pays little attention to the sustainable yield thresholds of the earth’s natural systems. Modern economic thinking and policymaking have created an economy that is so out of sync with the ecosystem on which it depends that it is approaching collapse. How can we assume that the growth of an economic system that is shrinking the earth’s forests, eroding its soils, depleting its aquifers, collapsing its fisheries, elevating its temperature, and melting its ice sheets can simply be projected into the long-term future? What is the intellectual process underpinning these extrapolations?
We’ve Been Here Before
We are facing a situation in economics today similar to that in astronomy when Copernicus arrived on the scene, a time when it was believed that the sun revolved around the earth. Just as Copernicus had to formulate a new astronomical worldview after several decades of celestial observations and mathematical calculations, we too must formulate a new economic worldview based on several decades of environmental observations and analyses.
The archeological record indicates that civilizational collapse does not come suddenly out of the blue. Archeologists analyzing earlier civilizations talk about a decline-and-collapse scenario. Economic and social collapse was almost always preceded by a period of environmental decline.
For past civilizations it was sometimes a single environmental trend that was primarily responsible for their decline. Sometimes it was multiple trends. For Sumer, rising salt concentrations in the soil, as a result of an environmental flaw in the design of their otherwise extraordinary irrigation system, led to a decline in wheat yields. The Sumerians then shifted to barley, a more salt-tolerant crop. But eventually barley yields also began to decline. The collapse of the civilization followed.
For the Mayans, it was deforestation and soil erosion. As more and more land was cleared for farming to support the expanding empire, soil erosion undermined the productivity of their tropical soils. A team of scientists from the National Aeronautics and Space Administration has noted that the extensive land clearing by the Mayans likely also altered the regional climate, reducing rainfall. In effect, the scientists suggest, it was the convergence of several environmental trends, some reinforcing others, that led to the food shortages that brought down the Mayan civilization.
Although we live in a highly urbanized, technologically advanced society, we are as dependent on the earth’s natural support systems as the Sumerians and Mayans were. If we continue with business as usual, civilizational collapse is no longer a matter of whether but when. We now have an economy that is destroying its natural support systems, one that has put us on a decline and collapse path.
The Current State of Our Natural Systems
The reality of our situation may soon become clearer for mainstream economists as we begin to see some of the early economic effects of overconsuming the earth’s resources, such as rising world food prices. On the social front, the most disturbing trend is spreading hunger.
As rapid population growth continues, cropland becomes scarce, wells go dry, forests disappear, soils erode, unemployment rises, and hunger spreads. As environmental degradation and economic and social stresses mount, the more fragile governments are losing their capacity to govern. They become failing states—countries whose governments can no longer provide personal security, food security, or basic social services, such as education and health care. As the list of failing states grows longer each year, it raises a disturbing question: How many states must fail before our global civilization begins to unravel?
How much longer can we remain in the decline phase, whether measured in natural asset liquidation, spreading hunger, or failing states, before our global civilization begins to break down? We are dangerously close to the edge. Peter Goldmark, former Rockefeller Foundation president, puts it well: “The death of our civilization is no longer a theory or an academic possibility; it is the road we’re on.”
Adapted from World on the Edge by Lester R. Brown. Full book available online at www.earth-policy.org/books/wote.