The End of Growth

The End of Growth

Adapting to Our New Economic Reality

Book - 2011
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Publisher: Gabriola, B.C. : New Society Publishers, c2011
Branch Call Number: 330.905 H PBK
Characteristics: xiv, 321 p. : ill. ; 23 cm
ISBN: 9780865716957


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Jul 14, 2018

He got the Rule of 72 almost right, but nothing else.

Using the rule of 72 (Heinberg uses 70, which is inaccurate) you can calculate how many years it takes for something to double. For instance, China’s economy was growing at 10% p.a.. 72/10 = 7.2 years. Thus, its economy was doubling every 7.2 years. And, for a a while it did. Heinberg points out that if you project that economic growth into the future, you quickly reach absurd levels. Predictably, the Chinese economy has slowed down from 10% to 6.5%. Not before long it will drop to 3%, and downward nearer to zero by the end of the century or earlier. This economic deceleration is observable everywhere else. Look at the US, it’s cruising speed has dropped from 3.5% not that long ago to closer to 2%. The same is true for Europe where it’s cruising speed is even lower; and, Japan where it is even lower than Europe’s.

The author understands the above. But, when he explains why that is the case is when he falters badly. According to Heinberg, the current economic deceleration is due to scarcity of resources, petroleum in particular (that’s his dogma) and economic disequilibrium. He bases his diagnostic on two assumptions. The first is that modern economies have to grow to survive, otherwise they spiral downward into chronic Depression. The second assumption is that petroleum is the sole engine of economic growth. And, this engine is running out of fuel quickly. So, modern economies are doomed to suffer a chronic Depression. His example is the Housing Financial Crisis of 2007 - 2009. He explains it as an oil crisis, which it clearly was not (just study the data).

Going back to Heinberg’s assumption that economies have to grow otherwise they crash forever is ludicrous. Economic growth simply decelerate very slowly over decades (Europe, Japan). Economies don’t abruptly go bust forever. Also, the whole bit about Peak oil, resource scarcity, and rising inefficiencies in extracting energy are contradicted by the shale oil revolution that has dramatically increased oil reserves. And, shale energy extraction is increasingly efficient due to rapid technological innovation. And, so are many alternative energies that are energizing a rising % of worldwide electricity. So, we have access to more oil than we used to before the shale revolution, and our energy mix is more diversified. We are also becoming more energy efficient (not less as the author advances). The mentioned ongoing trends contradict everything in this book.

In his concluding chapter, Heinberg describes a post-industrial world returning to earlier agrarian societies where we would depend on locally grown food and manufactured craft goods without much energy inputs besides our own muscles.

What is going on is very different than Heinberg’s analysis. The major forces include an aging world, the rule of 72 (we have reached in many economies a level of economic saturation), fiscal constraints, and AI and automation (that is threatening employment). Except for the rule of 72 bit, Heinberg is oblivious to everything else.

ravishri Jan 22, 2014

This book is gives an overview of the coming “great contraction”. I was a bit skeptical of its basic premise (that the phenomenal growth we witnessed in the past couple of centuries is soon to be a thing of the past) when I picked it up but it does make some valid points. It is well researched, well written and drives its point home by deeply examining the assumptions that are critical for continuous growth in the future.
The book, however, deeply discounts the possibility of new technology being better and more efficient than current technology. That is the one thing which I disagree with the author about.

May 28, 2012

Nothing is forever.

Mar 28, 2012

This book describes our current economy of growth and explains why it can’t continue because of resource depletion, climate change, a failing financial system and unmanageable government debt. The book is an economic primer explaining our increasingly complex financial system and its ever-more-bizarre instruments. It explains Peak Oil and the depletion of other critical resources, including fossil fuels and minerals and looks at the negative impacts on the eco-system, including Climate Change, caused by our rapacious economy.

The author explains how we arrived at the current situation and why we can’t continue on the existing path; why innovation, resource substitution and increasing efficiency can’t keep us growing.

After describing all the problems, he turns his attention to possible solutions and what a post-growth, steady-state economy could look like and describes some current initiatives in the right direction.

The book is well worth reading. It is an excellent source of information both for people not familiar with these concepts and for those aware of the situation in principle but who want more detailed information and analysis. Most of the book is relatively easy to read. It does get quite technical in places, especially when describing the machinations of the financial system. The glossary of terminology and financial instruments can make the eyes glaze over if the reader does not have a financial background. There are lots of graphs which help to explain the data. However, one can gloss over some of the technicalities without losing any of the flow and force of the book.

This is not relaxing bed-time reading but is an essential start to learning about what the future will hold for us in the near future and for coming generations.


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