Limits of Growth

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Limits of Growth


The proposition that economic growth could not continue indefinitely was first put in a formal quasi-mathematical manner by Thomas Malthuss (17661834) pamphlet An Essay on the Principle of Population (1798). Malthuss essential propositions were that population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will shew the immensity of the first power in comparison of the second (Malthus 1798, chap. I.18).

Malthuss analytic concept, of a clash between variables growing at fundamentally different rates, failed to take root in economic methodology, which instead came to be dominated by concepts of stability and equilibrium. Also, contrary to Malthuss assumptions, both food and income per capita grew in Europe over the next two centuries.

However, world population also continued to grow, and at an accelerating exponential rate, rising from about one billion in Malthuss time to four billion by the early 1970s. The specter of population outrunning food production was once again raised by the biologist Paul R. Ehrlich in The Population Bomb (1968). The oil engineer M. King Hubbert (1956) hypothesized that economic growth would exhaust oil supplies during the twenty-first century. And, in The Limits to Growth (1972), Donella Meadows and colleagues argued that complex interactions between population, resources, and pollution would limit economic growth.

Ehrlichs analysis, like Malthuss, focused predominantly on the relationship between population and food output. On the basis of verbal hypotheses, Ehrlich presented a number of future scenarios with short-term quantitative predictions that were soon falsified. The key weaknesses in Ehrlichs analysis were the extrapolation of short-term trends, and the expectation that these trends would manifest in near-immediate problems. However, these short-term trends were not maintained. For example, Ehrlichs book coincided with the green revolution in agriculture and extensive birth control programs, which undermined his predictions of imminent widespread famines.

Hubberts argument differs from those of Malthus and Ehrlich by considering a nonrenewable resource as the limit, rather than food. Hubbert proposed a logistic depletion of total reserves, so that actual oil output would follow a bell-like curve, peaking in the early twenty-first century when approximately half the planets finite stock of oil had been mined. Though the model works well for given deposits, its aggregate outcome is disputed. Critics argue that technological change and price incentives will increase the amount of recoverable reserves indefinitely. Adherents assert that the physical limit will ultimately assert itself, thus limiting economic growth because alternative energy sources to oil have lower net energy gains than oil.

Meadows and colleagues present a sophisticated case for limits to growth using a systems dynamics computer model known as World3. The key features of a systems dynamics model are: (1) the model consists of a set of coupled difference or differential equations (that are represented as flowcharts rather than symbolic equations); (2) the model specifies both positive and negative feedbacks between variables; and (3) time relationships between variables are depicted (there is, for example, a fifteen-year lag between the emission of a chlorofluorocarbon molecule at sea level and its entry into the stratosphere, where it will destroy about 100,000 ozone molecules for about one century before decaying).

Whereas Malthus and Ehrlich presumed the rates of population change remained constant, World3 made this and other rates of change depend on feedbacks from other variables. For example, the fertility rate is affected by negative feedbacks from per capita gross domestic product (GDP), social services, and per capita expenditure on birth controlso that increasing incomes reduce the rate of population growth. Overcrowding and pollution are positively linked to the death rateso that increasing pollution also reduces the rate of population growth.

World3 allows for technological change that enables increased output per unit of inputan effect that reduces the severity of physical constraints on growth over time. The model is also designed to accept different specifications of ultimate physical constraints, while specifying base-level estimates related to known levels in 1970. Physical constraints included both sources, or fixed nonrenewable resources such as land and oil, and sinks, or the capacity of the ecosystem to absorb pollutants.

As an aggregative numerical model, World3 has to reduce some multifaceted phenomenasuch as population, food, pollution, and technologyto index numbers that represent each variables current level and a set of influences on other variables over time. The models numerical outcomes are thus not predictions but broad scenarios, where increases in some index numbersfor example, pollutioncause severe dampening effects upon others, such as population or average human welfare. The model also operates at a global level, and thus omits the possibility that some interrelations, and therefore crises, may be localized (for example, land degradation problems are more likely to be severe in Africa and Australia than in Europe and Japan).

In The Limits to Growth, World3s index values were calibrated to ensure rough compliance of the model with data from 1900 till 1970. The model was then run forward to the year 2100 under a range of different scenariosstarting from business as usualand then adding a layered range of alternative futures, with changes to population growth norms, accepted levels of pollution, rates of technical change, and desired levels of consumption. Differing levels of physical constraints were also considered.

In contrast to Malthus and Ehrlich, the Meadows group concluded that it was feasible that the world could provide a high-quality life for the entire human population for the indefinite future. However, they also concluded that current growth patterns were likely to overshoot this ideal, leading to some form of severe crisis that would cause world population to fall precipitously in the middle of the twenty-first century.

The Meadows study was a popular success, selling millions of copies, but it was also highly controversial. Critics attacked it on four main grounds, asserting that it:

  • Applied unrealistically low-capacity constraints
  • Underestimated the markets response to price signals and the adaptability of technology
  • Based crucial causal relations on inadequate data
  • Used an inappropriate modeling technique

The Meadows group rejects these criticisms on the general ground that they result from applying a mistakenly reductionist approach to their holistic study. For example, they allege that the criticism about capacity constraints being set too low ignores the corollary that, with higher capacity constraints, there is an increased likelihood of pollution levels overwhelming the planets sinks. In their 30-Year Update, published in 2004, they argue that to really disprove their conclusions, one or more of the following assumptions has to be disproved (Meadows et al. 2004, pp. 175176):

  • Growth is considered desirable.
  • There are physical limits to the sources of materials and there are limits to the sinks that absorb waste products.
  • The growing population and economy receive signals that are distorted, noisy, delayed. Responses to those signals are delayed.
  • The systems limits are not only finite, but erodable when they are overstressed there are strong nonlinearitiesthresholds beyond which damage rises quickly and can become irreversible.

They also argue that the systems dynamics approach to modeling is superior to the general equilibrium approach favored by economists. One of the disappointments for the Meadows group has been the lack of adoption of systems dynamics methods by other social sciencesand in particular, by economics.

The 1972 report predicted that environmental issues would dominate early twenty-first century politics. That expectation is confirmed by the widespread political acceptance that global warming is occurringthe underlying cause of which is the emission of far more carbon dioxide than the planets carbon-absorbing sinks can process, and the degradation of those sinks in a feedback process. CO2 levels have risen from 325 parts per million at the time of The Limits to Growth report to 380 parts per million in 2006, consistent with the reports predictions.

Nicholas Stern (2006), using accepted economic computable general equilibrium methods, has amplified the political acceptability of the proposition that global warming will limit growth potential. However, Stern makes much milder predictions of a 5 to 10 percent fall in mid-twenty-first century global GDP because of climate change, and he asserts that addressing global warming will cost only 1 percent of annual GDP. The Limits to Growth s standard run, on the other hand, contemplates a fall in human welfare of more than two-thirds from its peak level. Its sustainable society achieves high human welfare, but requires population stabilization policies, limits on material production, and innovation in food technology, in addition to the power generation, transport efficiency, and pollution abatement contemplated by Stern.

The Meadows group is broadly pessimistic about whether these policies will be implemented in time. In the 30-Year Update, they argue that humanitys ecological footprint (Meadows et al. 2004, p. xv, following Wackernagel and Rees 1996) exceeded its carrying capacity by more than 20 percent in 2000. They therefore predict that, given the lags in systemic adjustments and the erosion of physical limits, the twenty-first century will experience an overshoot. Their policy recommendations, which were intended to avoid overshoot in 1970, are now designed to limit the impact of overshoot to oscillations and a diminished carrying capacity, rather than a serious collapse.

SEE ALSO Change, Technological; Club of Rome; Economic Growth; Green Revolution; Malthus, Thomas Robert; Malthusian Trap; Natural Resources, Nonrenewable; Overpopulation; Ricardo, David


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Steve Keen