?We are already in the post-growth era,? states Tim Morgan in ?Life After Growth?, ?for which there exists no prior experience, and for which virtually no preparation has been made,? writes Mike Scialom.
For 40,000 years, Morgan explains, humans were hunter-gatherers. Then, around 10,000BC, it became apparent that in a group of, say, 20 people, 19 could hunt and the 20th could stay behind and make arrowheads ? or plant barley. Thus began the agricultural era (?the first great breakthrough?) which lasted until 1760, when the arrival of steam power ushered in the Industrial Revolution. Unfortunately, however, the economic engine of growth for the last 250 years ? which has seen the earth?s population ascend to truly astonishing peaks of success ? faces early obsolescence because we?re running out of easily accessible sources of energy. The years of readily available oil and gas are over and, instead of moaning about energy firms profiteering (they are profiteering, but that?s another story), we?d do better to work out how we?re going to cope: across-the-board prices rises are already the norm . . .
Morgan suggests that future historians will cast the Industrial Age and its phenomenal 250-year trajectory as a fabled yet troubled time during which human potential was fulfilled in ways previously unimaginable ? just not fulfilled in ways that would benefit future generations much. The author demands we stop pretending the crisis will somehow blow over, because continuing attempts at denial are hampering options which could make the difference between making the coming era of scarcity manageable ? or unmanageable.
Our Rome began burning in earnest during the 1980s, when we ? us, the Western economies and the consumers who fell for the backstory ? began outsourcing production to emerging economies. So far so OK, but production in the West went down without any corresponding reductions in consumption. Not only did politicians and policy makers fail to explain the problem ? they encouraged increased consumption. ?The real causes of the economic crash include the cultural norms of a society that came to believe that immediate material gratification, in excess of income and fuelled by debt, can ever be a sustainable way of life.?
The gap between production and consumption was then bridged by debt. ?Bankers did well out of the process for the simple reason that demand for their product (debt) was increasing,? with the outcome being that globalisation became ?a self-inflicted disaster with few parallels in economic history?.
As the scale of the debt increased, banking, having once been the servant of industry, became its master. And so here we are: the gap between ?the economic claims incorporated in the financial system and the actual potential of the real economy? are too big to repay. Indeed, ?the financial and the real economies can be reconciled only if financial claims (meaning debt and money) are destroyed on a truly enormous scale?. Morgan estimates this value writedown to be of the order of $90 trillion, and ?we are continuing to add excess claims at a rate of about $7 trillion each year?.
This rebalancing of the economy ?is going to be hugely disruptive, and it is going to change our world out of all recognition?.
The markets? scam ? producing profits out of thin air ? might have worked a while longer were it not for a geological problem which has begun skewing the metrics. Morgan measures the issue using just a single statistic: EROEI, or ?energy returns on energy invested?. EROEI is ?the difference between energy extracted and energy consumed in the extraction process?. Fifty years ago, when all you had to do was siphon oil out of the Arabian sands, the EROEI figure was 100:1. It declined to 37:1 in 1990 and then to 23:1 in 2000. Today it is 13:1. If it falls to 5:1 it?s nearing the point where the energy required to extract the energy out of the ground is greater than the amount of energy acquired from that hole in the ground. The logic of the equation is inescapable ? ?there is no point whatsoever in producing 100 barrels of oil (or its equivalent in other forms of energy) if 100 barrels (or more) are consumed in the production process.?
The reason crude techniques such as shale gas extraction ? fracking ? are even being considered is because consumers/the electorate are unwilling to accept the actualité. As fossil fuels prices go up, ever more desperate efforts are made to maintain the continuity of supply. An example of this species of denial in action is the Macondo project, 66km off the coast of Louisiana and 1,500 feet underwater. Even if it works ? and the Deepwater Horizon disaster on this site illustrated the problems all too well ? this site ?is expected to recover 50m barrels of oil . . . enough for about 13 hours of the global requirement of oil?. Why aren?t we changing course? Because we want to believe economic icebergs don?t exist . . .
The rollercoaster psychology of stock market-based excess ? remember the dot.com bubble? ? is the bane of authentic economic activity has, Morgan writes with wry amusement (or is it dark humour?), not changed since 1636-37, when Tulip Mania became the first financial crash. The blueprint for a bubble involves a range of factors including idiotic escalation of prices ? at its peak a single tulip bulb could be ?as valuable as a mansion, or equivalent to 17 years of skilled wages? ? alongside novel trading forms (tulips were being sold ?on unregulated fringe markets rather than regulated exchanges?) and, crucially, the loss of critical faculties during ?a period of bizarre mass psychology verging on collective insanity?.
Nothing much has changed, says Morgan, before predicting four adaptive measures that will allow us to negotiate our way to a more plausible future:
1. Personal transport will be replaced by public transport
2. Human habitation will be located in much more concentrated spaces
3. There will be shorter supply lines, with an emphasis on localised self-sufficiency
4. The era of measuring the quality of life by the quantity of our possessions will be over.
?Implementing these changes will be tough, but failing to do so in a timely way would be tougher still.? Morgan?s wish-list is to stop subsidising biofuel crops, stop locating wind turbines offshore, start seriously converting waste to energy, stop ?clinging on to our cars? and stop ?leaving the least-favoured countries to fend for themselves?. With sound management EROEIs can be stabilised, but an unmanaged deterioration of EROEIs would inevitably result in food shortages and would ?prompt mass migrations on a scale dwarfing anything witnessed so far?, with conflict inevitable ?in a world competing for increasingly scarce resources?.
?Life After Growth? has comprehensively reframed my thinking about what?s going on in the world today.