Socialism today is a much different animal than it was a century ago. Younger generations are largely unaware that socialism was originally touted by intellectuals primarily as an economic system with the ability to produce abundances of wealth unfathomable to a world yet burdened by the capitalist yoke, not so much as a panacea for racism, patriarchy, destruction of the environment, depletion of resources, and other such injustices. Marx wrote of a future society bereft of useless and destructive market competition. Oskar Lange argued that a socialist economy “would avoid much of the social waste connected with private enterprise … with much greater thoroughness” than could regulation.1 Stalin assured the communist world that the destitute Soviet Union was only “dizzy with success” and would soon be outproducing the West.
But now socialist movements have changed course, no longer wishing to surpass capitalism’s economic productivity. The problem on which modern socialism wishes to focus is not that capitalism does not produce enough to provide for the population—no, capitalism now produces too much. Ayn Rand anticipated this neo-Luddite nonsense over four decades ago:
Instead of their own promises that collectivism would create universal abundance and their denunciations of Capitalism for creating poverty, they are now denouncing Capitalism for creating abundance. Instead of providing comfort and security for everyone, they’re now denouncing people for being comfortable and secure.2
Yes, from the same political umbrella that brought you the idea of “post-scarcity” now comes the newest knock-down argument against markets: Capitalism requires infinite growth on a finite planet. Never mind the cacophonous chord of irony the two ideas produce together. The latter idea has achieved the status of a memetic utterance, the validity of which no one bothers to investigate before spewing all over every social medium one can access, and seems to stem from a misunderstanding about the nature of economic growth.
The Left Call blog attempts to explain the apparent crisis:
Capitalism, at least as we know it, requires infinite growth. For-profit companies have to continue to grow in size and increase their profits year after year or risk losing investment money […] The problem in the long term is that an economic model of infinite growth requires the use of natural resources at increasing rates. The most obvious of these natural resources is petroleum or oil. But many other resources like water and coal are being used at increasing rates to sustain growth in population. This growth in population is fueled by the continued increase in use of natural resources. It’s a cycle of infinite growth that is simply unsustainable on a planet of finite resources.
The author errs in equating economic growth with the growth and profit of individual corporations. Businesses can and have increased their profits in times of economic downturn. Capitalist markets incentivize each entrepreneur to create growth, but this does not mean that it requires growth on the whole. We should be so lucky to live in a world where the net profit of large corporations always indicates economic growth.
The author also expectedly expresses the fear that capitalism will deplete the resources upon which it relies to thrive, oil in particular. But predictions for peak oil have had the same accuracy as predictions for the rapture. Far from beginning to peter out in 1970 as geologist M. King Hubbert predicted, oil production today is at an all-time high. Much more likely than the supply of oil reaching a peak is the demand for oil turning downward as electric vehicles and renewable energy become more cost-effective. But even if we were facing a dwindling of a certain material, the market has a mechanism for achieving order and conserving scarce resources. Here’s Hayek:
It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement … The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly.3
So long as the signals communicated by prices are not distorted by government intervention, market incentives can direct actors to find alternatives for exceedingly scarce natural resources.
More of this doomsday economic illiteracy can be found on the website of the Center for the Advancement of the Steady State Economy (CASSE), also known as the Center for No One’s Life Ever Materially Improving. The center’s staff strangely consists of several supposedly serious economists, despite the fact that the “steady state” is just hypothetical point on a graph that could only be targeted, much less achieved, with premonitory knowledge about all innovations and the availabilities of all resources into the future. In what would make more sense as a college freshman’s MySpace rant about societal trends and evil corporations, CASSE’s Rob Dietz tackles the question everyone is asking—“Why Do So Many People Believe in the Fantasy of Infinite Growth on a Finite Planet?”
The first reason, Dietz asserts, why people believe that growth is necessary or desirable is that they believe it is necessary to create jobs. In classic, fallacious Luddite reasoning, he insists that if we cared about people having jobs, we would not allow technology to creatively destroy certain occupations. He offers as an anecdote his friend Chris, a gas station attendant who blesses motorists with his “valuable service” of pumping gas. Chris lives in Oregon, where the law requires a “professional attendant” to handle the complicated task of pulling the trigger on the gas pump. Dietz notes that when such laws are not in place, Chris’s “job is eliminated and the customer is forced to pick up the slack.”
The recipe for jobs without growth, then, is to “stop the process of eliminating jobs through outsourcing and machinery-for-people swaps.” To wit, government should force employers and consequently consumers to shell out their money to pay for others to perform menial, nearly useless tasks. Dietz, who reportedly has some background in economics, unbelievably ignores the fact that every dollar consumers are forced to pay to a useless employee is a dollar they cannot pay to an employee elsewhere who performs a task they actually find valuable. Dietz and his Luddite, make-work ilk see only the immediate, obvious effects of a policy and remain ignorant of the unintended consequences. They also fail to realize that all labor replaced by either trade or automation is labor freed to do something else, something that is useful.
The other reason people value economic growth, writes Dietz, is because they refuse to pay attention to the disastrous environmental conditions that growth apparently unavoidably creates. That we are “disrupting and dismantling natural systems that we only partially understand” is the only information he gives. I am sure, though, he wants us to imagine that a world with no clean water, no arable land, and no cute animals is the necessary consequence of continued economic growth. The Left has constructed a false dichotomy between abundance and longevity. For those who have been deceived by this faulty reasoning and wish the best for posterity, demonization of growth is the only option.
So what is this economic growth bugaboo anyway? Simply put, economic growth is an increase over time in the quantity and quality of goods and services a given population can consume. Growth is having three square meals each day while your ancestors were lucky to have two, or downloading more eBooks each month than your parents ever owned as children, or not ever having to wear Sears Toughskins because most folks can afford to own more than one pair of pants. It can be hard to measure and quantify growth, but the basic idea is easily grasped. Growth is what makes people’s lives materially better—it puts more food in their stomachs and better roofs over their heads.
Some might intuitively assume that this growth can only come from forcing capitalist economies onto indigenous peoples in far-flung corners of the world and extracting more resources from the earth. (I would guess that Rob Dietz imagines a redwood being mowed over every time he sees a child eat a balanced breakfast.) Sure, having access to more of the world’s resources enables us to consume more, but is that where all growth comes from? If the Cro-Magnons had the same access to resources as today’s humans, would they have the same quality and quantity of consumer goods? There are additional variables in turning resources to economic growth.
The chief driver of economic growth is ideas. Standards of living are improved by finding newer and better ways to produce useful goods and services. Access to resources is worth naught if you have no way to transform them into useful products. When new useful products or processes are invented, our lives are made better. Growth can come from the invention of the printing press, the introduction of a new ride-sharing app, the installation of a device that turns lights off in currently unused sections of the workplace, or simply a fresh new style of management that allows workers to be more productive. Of course, resources are an indispensable part of the equation. The ideas that spur economic growth are, after all, about how to use the world’s resources.
Our friends at CASSE warn in their FAQ that “there is a fundamental conflict between economic growth and conservation of natural resources. Growing the economy means shrinking the ecosystem. Furthermore, pollution is an inevitable byproduct of economic production.” Surely, this is true in some cases: Were it not for the primeval advances in fire-making and carpentry, no forest would ever be cleared, and ocean inhabitants would certainly encounter less oil spills if the internal combustion engine had not been invented. But not all growth-generating ideas consume more resources and pollute the environment. Consider the invention of Marmite, a food spread made from yeast-extract. Instead of using additional natural resources, it uses by-products of beer brewing, cutting down on waste. Growth and production need not cause pollution, either. Energy production is notorious for its environmental effects, but ideas for efficient wind turbines and solar panels can create boundless economic growth while eliminating pollution. The CASSE FAQ laughably falls back upon claiming that technological advance cannot make growth sustainable due to the second law of thermodynamics—entropy. If someone within their ranks has found a policy solution to escape the laws of physics and the inevitable heat death of the universe, I am sure the scientific community would love to hear it.
Consumption to any degree from basic human subsistence to “post-scarcity” will always require production; production to any degree from foraging to hyperindustrialism will always require resources. The planet will always be a finite cosmic body. Neither freezing economic growth nor collectivizing property can avoid the laws of physics or biological limitations. Primitivism is a poorly fashioned solution to a misunderstood problem. Economic growth is not the antithesis of sustainable life on Earth but the best way to achieve it. Only through private property, competition, and an unmolested price system can human society discover ways to make productive use of our most abundant resources and avoid depleting those that are more scarce. Milking more utility from fewer resources is a dependable function of the market. Whether it is tiles generating energy from footsteps, paving streets with recycled bottles, or Texas hunting ranches preserving endangered species, there are myriad ways economic growth has found to circumvent the problem of a finite planet and infinitely more ways waiting to be discovered.
- Lange, Oskar. “On the Economic Theory of Socialism: Part Two” The Review of Economic Studies Vol. 4, No. 2 (1937), 126.
- Rand, Ayn. The New Left: The Anti-Industrial Revolution. New York, NY: Plume, 1993.
- Hayek, F. A. “The Use of Knowledge in Society” The American Economic Review Vol. 35, No. 4 (1945), 527.