Following the massive bailouts, stimulus spending and quantitative easing of recent years, everyone breathed a sigh of relief and went back to sleep, says Richard Heinberg. But the coming global energy crisis will likely provide the jolt that wakes everyone up again.
Richard Heinberg: You’ve identified the problem very well. The growth ideology is as much "religious" as economic (if we define "religion" as a self-reinforcing belief system immune to rational falsification). In fact, economics itself is far from being a science, and relies on many unexamined assumptions – including the assumption that growth of population and consumption can continue forever on a finite planet. This is all mere wishful thinking, and is characteristic of a certain mindset that accompanies booms of all kinds – whether stock market booms, real estate price booms, resource extraction booms, or whatever. People who are profiting from the boom adopt the attitude, "This can go on forever! Everyone will get rich!" Of course, it’s never true. Rational arguments work for some people, but never for boom boosters.
Pro-growth economists and politicians feel especially justified by the fact that the boom they’re boosting – fossil-fueled industrial expansion – has been going on for decades. However, the difference in time-scale doesn’t mean that the basic boom-time dynamics aren’t the same.
RH: Science and technology have certainly accomplished wonders during the past two centuries. And there are undoubtedly more discoveries and inventions awaiting us. However, there are two reasons to be sceptical that science and technology will keep our economy growing in perpetuity.
The first has to do with correctly identifying the sources of economic expansion since the Industrial Revolution. It is commonly believed that science, technology, and markets were the reasons for the boom. These all certainly played important roles, but the boom would not have happened without fossil fuels. Energy is the fundamental necessity for all economic activity, and for life itself. Fossil fuels gave us energy that was cheaper and more abundant by far than had ever been available previously. Now, as the "low-hanging fruit" of our endowment of coal, oil and gas are gone, and as climate change looms as an economy-killing threat, we must develop other energy sources to replace them. There are many options, but none are as cheap, abundant, portable and concentrated as fossil fuels. Technology does not operate by itself; it needs energy. And while some technologies help us access new energy sources, they cannot violate the laws of thermodynamics. There is no free lunch!
The second reason is that science and technology are subject to the law of diminishing returns. In the early days of scientific research, a small investment yielded major discoveries. Today it requires teams of scientists using extremely expensive equipment just to test a very minor improvement on a basic technology that has been in use for decades. Many researchers into the history of science and technology have come to the same conclusion: we have reached a stage where investments in discovery and invention are soaring, but the outcomes are of dwindling practical importance.
AS: In The End of Growth you point out the factors that will prevent the economy from growing and among these you mention climate change, shortages of energy, water and minerals as well as "waves of bank failures, company bankruptcies", among others. And there is a lot of evidence available to support this attitude, as well as large quantities of serious literature on these subjects. Yet have we experienced a serious shift in human awareness? What can help politicians and people to realize that while preaching further growth we are setting ourselves on the road to nowhere? Do you believe that informing and educating people can change anything?
RH: I don’t seriously think that a book like mine will change the minds of most politicians and economists, or of a majority of the general public. However, if the facts I’m citing are true and relevant, if my logic is sound, and if I argue my case competently, a small percentage of the public will start to think differently. Those people will make better decisions in their own lives and help push the public discussion along. Will that be enough to avert climate change, bank failures and all the rest? Of course not. But at least for those few who were warned, and perhaps for others as well, the future will be better than it would have been if I had not written The End of Growth. I think it’s important that we each do what we can, despite the enormity of the looming challenges.
AS: The last century produced an ideology that might be called scientism. This ideology claimed to contain a "scientific" view of things but produced quite the opposite social effects. How much do you think we are still dominated by its mythologies and how do these block us from seeing the future in realistic terms?
RH: The fault does not lie with the scientific method. This is simply a way of testing and sorting assertions about reality. We need more critical thinking, not less. However, science is often directed toward the ends of those who are able to pay for research projects. So, for example, we have chemical companies funding research to "prove" that genetically modified foods are perfectly safe, and oil companies funding research apparently showing that fracking is completely harmless to the environment and to human health. Because it’s science, we therefore tend to believe it. We must always question the motives behind research projects, as well as the assumptions on which they rest.
AS: Many people do not seem to believe in the peak-oil scenario, or at least not in the likelihood of its immanent occurrence. And despite evidence of lower quantities of available resources (including oil), as well as fewer locations and more complicated methods for extracting oil (so well discussed and documented in your book), the attitude towards this problem is in a certain sense reminiscent of the attitude that haunted the famous and extremely insightful study entitled The Limits to Growth. Some critics doubt the evidence, others cherish their faith in the "miracles" of science and technology… You seem to insist that this time "the party’s over" (to refer to the title of your previous book). Why is it over as you suggest?
RH: The evidence is rock-solid at this point. If you define "oil" as only the stuff that can be bought and sold as oil (that is, if you exclude substances like biofuels, condensate, and natural gas liquids), then world oil production stopped growing in 2005. That is not because the oil industry stopped investing in exploration and new production technologies. Quite the opposite: between 1998 and 2005, the industry spent 1.5 trillion dollars on exploration and production, yielding 8.6 million barrels per day in additional world oil production. Between 2005 and 2013, the industry invested four trillion dollars in exploration and production, yet this more-than-doubled investment produced no new net production if we define "oil" narrowly and (in my view) correctly, as only what can be sold as petroleum refinery inputs. Meanwhile, oil prices have settled at a "new normal" of over 100 dollars per barrel. The only important new production (which merely offsets declines elsewhere) has come from tight oil sources in the US, and those are subject to very rapid per-well decline rates, as we have documented in our work at Post Carbon Institute (see for example here), so this will be a very short-term boom, and it will not be replicated to any significant extent elsewhere in the world.
I fully expect that oil industry spokespeople like Daniel Yergin will be telling us that "peak oil is rubbish" even after total world oil production has been clearly and obviously declining for a decade or more. But, of course, by that time there won’t be much of an economy left, and their audience will be largely occupied with tasks like finding enough food to eat.
AS: The energy crisis was a global issue a few decades ago, albeit for somewhat different reasons. Now we seem to be approaching another end of a cycle. What will be the consequences of the new global energy crisis and can we still hope to avoid it? If so, what strategies do you think might help us?
RH: I don’t think there is any way of avoiding a global energy crisis at this point. However, we can survive it more successfully if we do two things: invest in alternative (renewable) energy sources now while we can, and learn to live well with less. Find ways to fill basic human needs (growing food, heating water, keeping warm in the winter) by using much, much less energy. Often this can be done fairly cheaply, but it does require effort and changes in habits. The sooner we start, the easier the transition will be.
AS: For several decades, the school of economic thought associated with the likes of Herman E. Daly insisted on a sort of steady-state economics and on zero-growth or degrowth (á la Serge Latouche) strategies. However, these schools of though remain marginalized by mainstream or neo-classical economic thinking, which seems to dominate in the academy, business and government circles. What is required to change current economic mainstream thinking? How could universities and colleges respond to the urgent issues of our time?
RH: Frankly, I think only a big shock will change mainstream economic thinking. We actually started to hear some economists starting to question their assumptions in late 2008, early 2009. Then, when governments and central banks stepped in with massive bailouts, stimulus spending and quantitative easing, everyone breathed a sigh of relief and went back to sleep – even though the fundamental problems had not been addressed and the "solutions" are obviously short-term. It will take a bigger jolt to wake everyone up again.
Meanwhile, the ranks of followers of Daly, Latouche and other ecological economists continue to grow. It’s especially important that ecological economics gains a larger foothold in academia, as young people are still being indoctrinated with a view of the world that is demonstrably false, and that is driving the world toward a series of looming catastrophes. If you’re a student, consider studying and teaching ecological economics.