Book Review on "The End of Growth"

Book review by Audra Arnold, Greenheart Transforms Book Club member

Every Tuesday, the Transformative book club meets to discuss social transformation through various literature each member has chosen to read. Below is the book review and report given by Audra:

The End of Growth by Richard Heinberg

(2011)           

Author of 9 books and a Senior Fellow of the Post Carbon Institute, Richard Heinberg is one of the world’s foremost Peak Oil and fossil fuel depletion educators.

Intro

• “We are seeing a perfect storm of converging crises that together represent a watershed moment in history of our species. We are witnesses to, and participate in, the transition from the decades of economic growth to decades of economic contraction.” (pg. 4)
• We must recognize and understand the significance of this historic moment: we have reached the end of the area of an economy based on fossil fuel expansion and that policy makers and politicians pursue of continued growth is really a flight from reality.
• Compares Law of diminishing returns to our fossil fuel consumption: the first gains in efficiency are usually cheap, but every further incremental gain tends to cost more, until further gains become detrimentally expensive.
• John Williams: shadowstats.com – shows how government economic statistics are fudge to give US citizens a false sense of continued growth. Ex: Unemployment, GDP, inflation
• *World population from 1800 to 1930, doubled. From 1930 to 1960, doubled. We are on track to double by 2025; 1.3% growth rate per year. “By the year 2780 there would be 148 trillion humans on the Earth – one person for each square meter of land on the planet’s surface.” There has to be an end or a leveling out of population!!!
• He argues that growth is over because of three factors:
  • Resource depletion
  • Environmental impacts
  • Systematic financial and monetary failure
  • Need to be pursuing appropriate goals: instead of more and more, we need to focus on better and better.
  • Here are the questions raised by this discussion:
    • Inflation or deflation?
    • Will some nations fare better than others?
    • Will there be protectionist trade wars if this happens?
    • Will the downsizing of the economy lead to a downsizing of the human species? If so, how will that happen and how quickly?
    • What can we do to protect ourselves and adapt?
    • Protest: the limits to energy resources can be overcome with efficiency and substitution; innovation – very valid!
    • My thought: Heinberg is really giving us a call to adapt and change to take the end of growth in stride
    • Some would say we need a warning like the National Hurricane Center forecasts a storm striking at 5pm, but the storm’s speed slows and it does not hit until 11pm, still wreaking devastation. “The important thing will be that people were warned and got out of harm’s way: the forecaster’s failure to pinpoint the moment of impact will seem to have little importance – it did not make the hurricane disappear. (Box 1.3)
    • My argument: the tornado that hit Joplin, Missouri in 2011 – people heard the warnings, but locals were so used to hearing these storm warnings that they did nothing to take heed. If the sound of the warning is not changed and made relevant, no one will listen.

Part 1

• The book requires a basic understanding of why modern economies have come to rely on growth.
• This section of the text uses a lot of interesting history and terminology on banks and investing
• “Since the 1980s, the nearly worldwide re-embrace if classical economic philosophy has predictably led to the increasing inequalities of wealth within the US and other nations, to more frequent and serve economic bubbles and crashes.” (pg 39)
• We have placed “land” and other natural resources into our capital – assuming resources are never ending and ever growing
• “GDP counts only monetary transactions. If a country has happy families, the GDP will not reflect that fact; but if the same country suffers a war or natural disaster monetary transactions will likely increase, leading to a bounce in the GDP.
• “There are now as many Americans employed in manufacturing as there were in 1440, when the nation’s population was roughly half what it is today, while the proportion of the total US economic activity deriving from financial services has tripled during the same period. “ (pg 52)
• As the gift economy shrank and trade grew, the strands of mutual obligation that bind every human community together became transformed into financial debt.

Part 2

• Explanation of why the economic growth has stumbled badly for reasons internal to the world’s monetary and financial systems.
• There are practical limits to debt; that we have broached.
• Short-History of the world’s current economic crisis and the efforts world governments and central banks has made to manage.

Part 3

• There are factors external to the financial system that will make it impossible for the economy to recover and begin growing again.
• These factors include the depletion of fossil fuels and minerals as well as worsening natural and industrial disasters.

Part 4

• Addresses the arguments that we can overcome the limits to energy resources through innovation because economic strategies that worked well to maintain and expansive trajectory during the 20th century are losing steam.

Part 5

• How the winding down of the world’s economy will play out over the upcoming decades in terms of demography, international development, currency wars, and geopolitical rivalries.
• China’s continued rapid economic expansion - can this continue for long?

Part 6

• “Only a crisis – actual or perceived – produces real change. When the crisis occurs, the actions that are taken depend upon the ideas that are lying around. That,  I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes inevitable.” Milton Freidman
• Alternative currencies (local), ecological economies and the economics of happiness
• Sooner or later: a radical simplification of the economy is more or less inevitable
• Harvard economic historian, Ferguson, points out 6 ways of resolving a debt crises:

1. Increasing the rate of GDP growth;
2. Reducing interests rates;
3. Offering bailouts;
4. Accepting fiscal pain – lower standard of living;
5. Injecting more money into the economy;
6. Accepting defaults;

• Debt-based currency can only function in an expanding/growing economy – how about alternative kinds of currency?
• Most successful is BeerkShares: traded in the Berkshire region of Massachusetts, launched in 2006. BerkShares are available at five participating banks where 95 Fed Reserve dollars may be exchanged for 100 BerkShares and then used to purchase goods and services on a one-to-one basis at over 400 businesses.
• Saying that currencies would work best as nested, diverse systems – with local, regional and national currencies in simultaneous use
• “There should be a strict separation between money and the state.  Any financial instruments used by the government must be made to stand upon their own merits in the financial markets.” (pg 244)
• Post Growth economics: in conventional economics, natural resources like fossil fuels are treated as expendable income, when in fact, they should be treated as capital since that are subject to depletion.
• Four rules for future economics:

1. Growth rates in population and consumption cannot be sustained
2. Renewable resources must be consumed at rates below those of natural replenishment
3. Non-renewable resources must be consumed at declining rates – recycled whenever possible
4. Waste must be minimized, made non-toxic to humans and the environment

• Must aim for a dynamic balance between efficiency(maximizing output) and resilience (adaptability, redundancy, diversity, interconnectivity)  - today, we almost always focus on efficiency
• • Gross Domestic Product (GDP) made it easy for economists; if the number went up, all was well! But is it too simple…
  • Four main objectives to GDP:
    • Increasing self-reliance means decreasing GDP, If you eat at home, if you grow your own food, any advertising campaign aimed at curbing consumption (anti-smoking) – this all hurts GDP.
    •   GDP does not distinguish between waste, luxury and a satisfaction or basic needs.
    • GDP does not guarantee the meaningfulness of what is being made, bought or sold. Therefore it does not correlate with quality of life measures
    • “Gross” - No accounting for the distribution of the costs and benefits. If 95 percent of people live in poverty while 5 live in extreme wealth, GDP does not reveal that fact.
    • Other ideas to replace GDP: Measure of Economic Welfare (MEW), Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI)
    • People have been studying and trying to objectify and quantify “Happiness” – “happiness economists”
    • During the past 35 years, per capita income has grown almost 60 percent, but the percentage of Americans describing themselves as either “very happy” or “pretty happy” has stayed the same – actually peaked in the 1950s
    • Notes that evolution equipped us to seek status and novelty, and to engage in conspicuous consumption – these helped us survive and achieve reproductive success
    • But today, they keep us locked into behaviors that actually undermine our survival prospects
    • On the primordial savanna, we got a hit of dopamine (pleasure signal to the brain) every time we caught a tasty animal – today, it is that same brain area in the brain that lights up when we participate in stock trading
    • Americans are particularly susceptible because they are descended from immigrants with higher frequency of the “exploratory and novelty seeking D4-7 allele” in the dopamine receptor – we were the ones who left the comforts of our native lands to seek opportunity across the ocean
    • Americans, he argues, are prone to impulsivity and addiction – we are addicted  to consumption
    • All of this would suggest that we are incapable to conserving our resources and are genetically wired to use up all of the plant’s resources and drive ourselves to extinction
    • Whybrow, “Selfish behaviors are reward-driven and innate, wired deeply into the survival mechanisms of the primitive brain, and when consistently reinforced, they will run away to greed, with its associated craving for money, food, or power. On the other hand, the self-restraint and the empathy for others that are so important in fostering physical and mental health are learned behaviors—largely functions of the new human cortex and thus culturally dependent. These social behaviors are fragile and learned by imitations much as we learn language” (pg265)

Part 7 – Life after Growth

• What can individuals and communities do to prepare for the changed conditions ahead.
• There is irony and risk pursuing the strategies to prepare us for the end of growth (disengaging from consumerism, getting out of debt, becoming more self sufficient) – if everyone did these, it would keep the economy from recovering and push us even further into recession
• We will come to see the most valuable assets are: functioning local communities composed of people who are willing to work together
• “During the past few decades North Americans have created a way of life…the result: most people simply do not know their neighbors” (pg 269)
• This is a bizarre situation which will be dangerous in the face of crisis
• So what can we do to help our individual communities become more resilient and better able to weather the approaching storm?
• Transition Initiatives and Transition Towns
• These are grassroots movements that educate people about these challenges and develop strategies to reduce their dependence on fossil fuels
• Entire communities like Totnes in the southwest of England are doing this: they have local currency, Totnes Food Hub cooperative, clothing swaps, town-approved Energy Descent Action Plan – a multi-decade strategy for reducing dependence of fossil fuels
• Whidbey, WA – another example of a community with Transition Initiatives
• Common Security Clubs: mutually supportive ways to deal with the immediate impacts from the fracturing of the economy: joblessness, home foreclosures, business failures, etc.
• What does the CSC provide? Learning together, Mutual aid, Social action
• http://localcircles.org/
• “Resource Sharing Group” in rural Maine started by Connie Allen
• “We would bulk shop together and tell each other about sales and ways to save money and time each week.”
• The group shared lawnmowers, books, tools, helped one member set-up a new office, set-up a website to share information and lists of old items for sale. Offered tutorials on a variety of subjects, researched job possibilities, had potlucks where they shared inexpensive and healthy recipe ideas
• We need a way to make the elements of a post growth economy visible and accessible to all communities
• RH says that these initiatives will be driven by local non-profit organizations, co-ops, and hybrid public-private agencies
• Locally based Community Economic Laboratories (CEL’s)
• The CEL would be a local multi-function hub consisting of a number of independent organizations and businesses dedicated to helping people impacted by hard times and to provide a framework for a new economy
• Examples: food co-op, community shelter, community garden, health center, free clinic, library, legal clinic, credit union (based on the JAK bank of Sweden)
• Sustainable Commercial Urban Farm Incubator (SCUFI) program  - could be used as the branding tool for CEL’s
• The Plant in Chicago: http://www.plantchicago.com/
• What will a sustainable society look like?
• The economy of the future will most likely be in steady state: The generations that grown up in a world after industrialization, will face many of the same kind of challenges ancestors did in the dark ages that followed other higher civilizations
• *”Can we surrender cars, highways, and supermarkets, but still keep cultural exchange, tolerance, and diversity, along with our hard-won scientific knowledge, advanced healthcare, and instant access to information?”
• Dancing Rabbit Ecovillage: Small community in northeastern Missouri, “to live ecologically sustainable and socially rewarding lives, and to share the skills and ideas behind that lifestyle.”
• RH: When I was younger, I had more time on my hands and lived for many years in these types of intentional communities – this is key; we do not have the time!
• We are living through the  5^th great turning in human history:

1. Fire
2. Development of language
3. Agricultural revolution
4. Industrial revolution
5. “Now we are participating in the turning from fossil fueled, debt-free and growth based industrial civilization towards a sustainable, renewable, steady-state society

• While the first 4 were expanding, this will be a contraction of society – let’s rise to the occasion!
• Do not waste time placing blame for the failure of our existing economic and industrial systems – this will not help!