EF Schumacher
A year after The Limits to Growth appeared, a soft-spoken ex-economist from the British Coal Board, EF Schumacher released a slim volume of essays with a catchy title: Small is Beautiful: economics as if people mattered. The timing was right. The global economy was reeling in the wake of the 1973 OPEC ‘oil crisis’. Oil-producing Arab nations had suddenly cut supply and jacked up the price of crude in retaliation for US support of Israel during the Yom Kippur War. Global commodity prices surged in tandem with oil. And three years earlier, in April 1970, the first Earth Day brought 20 million Americans to the streets. The environment was becoming a matter of growing public concern.
Schumacher’s work was received as a blast of common sense, a lucid critique of Western economics that brought things sharply into focus. He wrote with passion and clarity about the environmental effects of economic growth, suggesting an alternative to the neoclassical paradigm grounded in what he called ‘Buddhist Economics’. By that he meant an economics of consumption based on ‘sufficiency’, opportunities for people to participate in ‘useful and fulfilling work’ (which he called ‘Right Livelihood’ based on one of the requirements of Buddha’s Noble Eightfold Path) and an engaged, active community marked by peace and co-operation. He called for human-scale, decentralized and ‘appropriate technologies’ as an alternative to a rapacious, dangerous and unjust global system. ‘Ever-bigger machines, entailing ever-bigger concentrations of economic power and exerting ever-greater violence against the environment, do not represent progress: they are the denial of wisdom.’1
As Schumacher saw it, the human economic system must operate within, and be subject to, the constraints of the natural world. For him, this was the major failing of mainstream economics. It was in the end, he thought, a reflection of both human arrogance and human ignorance. ‘Modern man [sic] does not experience himself as part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that if he won the battle he would find himself on the losing side.’
Schumacher was the first popular writer to introduce the concept of ‘natural capital’ to a wider audience. This was a kind of analytic ju-jitsu in which he used the language of economics to illustrate his core idea of the environmental limits to growth. In ‘natural capital’ he included all renewable and non-renewable resources, as well as all ecosystem services and systems – from the pollination of crops through the decomposition of wastes to the regulation of the global climate. Schumacher acknowledged the role of science and technology in creating human-made, ‘sophisticated capital equipment’ but noted that this is a small part of the overall capital on which we depend.
‘Far larger is the capital provided by nature and not by man – and we do not even recognize it as such. This larger part is now being used up at an alarming rate and that is why it is an absurd and suicidal error to believe, and act on the belief, that the problem of production has been solved… The modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected… It lives on irreplaceable capital, which it treats as income.’
Since Schumacher first popularized the term, ecologists have embraced it, dividing the Earth’s natural capital into three broad categories, all of which are critical to maintaining growth.
Sources
The first and most obvious category of ‘sources’ includes energy and the basic raw materials that are harvested from the planet and fed into the industrial machine. Energy, specifically oil, is the lifeblood of modern economies. Around 90 per cent of our energy comes from fossil fuels – coal, oil and natural gas.
Oil is number one, accounting for 35 per cent of the world’s primary energy consumption.2 Two-thirds of it goes towards transport – powering our trains, airplanes, cars, trucks, ocean freighters, speedboats and snowmobiles. Oil is also at the heart of modern industry, providing the energy and chemical feed stocks to churn out endless consumer goods, electronics, pharmaceuticals, construction materials, machine tools, scientific equipment, chemicals, clothing and myriad other items that mesh into the seamless system of production that now straddles the globe. Perhaps more vitally, petroleum is the energy source that powers modern agriculture. Oil provides chemical fertilizers, pesticides and herbicides while gasoline fuels farm machinery. Oil is also essential to the processing, packaging and distribution of foodstuffs. There is a direct correlation between economic growth and oil consumption. Faster growth requires more oil, lower growth less. That’s why, in times of recession, when growth softens, demand for oil also falls. The same is true for other strategic metals and minerals like copper, iron, nickel, chromium, zinc, tin and manganese. Yet, like oil, the overall trend in the price of raw materials has been rising over the past decade.
When Dennis Meadows and his associates were building the original Limits to Growth model back in the early 1970s they were concerned that we would exhaust supplies of basic metals and other industrial raw materials within 50 years. That hasn’t happened. The global economy has expanded 10-fold since then and mining corporations have ransacked countries from Brazil and Peru to Canada and Mongolia in search of strategic materials. Extraction technologies have become more sophisticated and exploration continues to expand at an ever-increasing rate to the remotest corners of the planet. In 2008, the weight of all materials extracted and harvested around the world totaled 68 billion tonnes, nearly 25 kilograms a day for every person living on the planet. Global resource extraction has grown by nearly 80 per cent since 1980. The largest rise in per-capita consumption has occurred in the industrialized world.3
Digging it all out
Global resource extraction has grown by 78% over the past 30 years, from around 38 billion tonnes in 1980 to around 68 billion tonnes in 2008.
Global resource extraction by material category, 1980-2008
Source: SERI, materialflows.net nin.tl/19pu5tO
We have not bumped up against the limits of these strategic metals yet. But it would be imprudent to assume that supplies are limitless. If the rest of the world consumed copper, zinc, tin, chromium and silver at the same rate as the US, it is estimated that the global supply of those strategic metals would disappear in less than two decades.
A 2009 study highlighted by the Worldwatch Institute outlines broad-brush estimates of the availability of common metals based on current levels of consumption. Within the next century we will see major shortages of most basic raw materials as rich seams of ore are used up and new discoveries dwindle.4 Existing stocks will also become more expensive to pry out of the ground as ore grades decline. Part of the problem will be real physical shortages, but equally important will be the price of energy used in extraction as oil prices inevitably creep upwards.
Mainstream economists, business leaders and many scientists place their hope in technology and human ingenuity. They look at the last century of scientific achievement and technological progress as just the beginning of more and better innovation. Why worry about running out of resources, they ask, when we can become more efficient by improving our technology?
Isn’t technology an infinite resource? The short answer is, no. As Herman Daly writes: ‘Improved technology means using the entropic flow [remember our entropy discussion from the last chapter] more efficiently, not reversing the direction of the flow. Efficiency is subject to thermodynamic limits. All existing and currently conceivable technologies function on an entropy gradient, converting low entropy into high entropy, in net terms.’5
The counter argument is that efficiency improvements – doing more with less – mean we don’t need to worry about running out of raw materials. We can continue to have economic growth using less energy, fewer material inputs and fewer workers. (Don’t ask what happened to full employment. Efficiency demands