1. In limitless economic growth, investment builds productive capital, and
productive capital builds ‘stuff'. Returns of a small %
then add to investment, and this forms a continually multiplying spiral of
expansion. (note: my May 08 way of presenting the whole issue is NaturalClime.htm. This page introduces a simple spreadsheet model that is useful, showing that quite reasonable assumptions for the physical processes of economies can be switched from unsustainable to sustainable growth with a single policy decision, i.e. not pumping it up.)
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When things grow their relationships to everything around them continually change. The way nature handles that is to bring growth to a climax, so that changes in relationships at one scale result in stabilizing new relationships at another scale.
With economies it’s confusing. It's never been part of the plan to ever climax, partly because it seems the economies would be harmed if they stopped growing. It also appears that our dangerous impacts on the earth are growing with the economies, and threaten us even more. No doubt ending growth would be a big adjustment, but it need not mean slowing things down, just to stop speeding things up. Copying nature's methods, is actually possible. The main disruption would be for the people who accumulate unearned income, since that is what is used to pump up the scale of economies and money . Nothing else needs to suffer really, and the disruptions of rearranging the physical world ever more rapidly would ease off. The idea the economy would be harmed by slowing expansion comes largely the fear of short term recessions. Stabilizing investment, the 'economic accelerator', would not need to cause recessions, but would sustain the economies at a high stable level. If the policy is simply to unplug the accelerator, and leave everything else alone, physical changes in technologies and business would continue at a rapid pace with physical capital being continually replaced and upgraded as always. The main difference is that you'd switch continual accelerating expansion for continual steady improvement. It would be like easing off the accelerator on a winding road as a way to more comfortably make the sharp curves in the development path ahead.
The graphs here were made using a simple global economic model:
1) Investment funds that recirculate are used to build productive capital.
2) productive capital that decays builds ‘usable stuff' that decays
After year 20 in the model one or another term in the equation was taken out, causing the developmental turning point. These demonstrate the control potential for each type of 'intervention', one destructive and the other constructive.
1. In limitless economic growth, investment builds productive capital, and
productive capital builds ‘stuff'. Returns of a small %
then add to investment, and this forms a continually multiplying spiral of
expansion.
2. If investment were suddenly ended, capital would decay with some parts
wasting away more quickly than others, and everything would wind down.
It's hard to imagine a choice people could make to end investment permanently.
It's easier to imagine futuristic scenarios of ecological collapse or social
chaos that might cause a premature failure of civilization of this magnitude..
3. When you do not directly control the size or rate of expansion, but only the acceleration, physically small changes can be transformative. Here only the increment by which investment is increased each year is restricted, and the whole system changes. It switches from a run-away explosion to stabilizing in a new balance seeking form. This represents direct cybernetic control. It is a large conceptual leap to imagine, but satisfies the necessity that we somehow end our exploding economic footprint on the earth, and does so without disrupting the anything but the rates of change of the present system. What most people don't realize is that this is the growth sequence of their own biological development, a short period of exponential expansion (before we were born), followed by switching to a continual growth and learning in youth that leads toward our taking an independent stable and creative role in the world. That's actually the normal development sequence for all living things, and an option that is available for the economies. If you consider the time scale in the charts to be hundreds of years, give or take, this might also suggest the general time scale over which this kind of change might take effect.
notes:
1) note: dollars of economic product correspond
to energy at ~8000btu/$ for fuels used, climax is then a switch from continual
increase in energy through-put to continual improvement in energy
through-put.
2) definitions of the variables and the model and a few notes are to be
found in
GrowthSwitch.xls It's a series of 3 simultaneous relationships, Economic
Product: P1=C0*R, Capital: C1=C0-C0*d+I0
and Investment: I1=I0+I0*r.
Run 2 makes I0=0 at step 20, and run 3 makes r=0 at
step 20. That's the entire difference. Many more features
could be added, but the result is the same if, as here, 'r' includes all
the regularly reinvested returns on investment and setting it to zero has no
other effect on how returns on investment are used.