Humpty Dumpty climbed up a wall.
Humpty Dumpty seemed certain to fall.
But a group of economists, proving their worth,
Built a ladder so Humpty could climb back to Earth!

A dot-com bubble. A housing bubble. A financial bubble. Lester Brown of the Earth Policy Institute refers to the challenge for politicians to deflate the “bubble economy” before it bursts, because the modern global economy has become so overgrown in relation to its geo-bio-physical foundations.1 George Soros, one of the world’s leading financiers, is trying his best to warn us about the crash-prone position of the global economy.2 What is now being experienced as the pain of a recession in the US is very real. Yet it is modest compared with the chronic suffering and structural economic violence experienced in much of the world.3

The only policy prescription currently available for dealing with a recession is to restore growth by boosting spending for consumption and investment. If increasing consumption in the wealthy regions of the world is the only option, how are those who are truly impoverished in other places to improve their prospects without causing even more damage to the fabric of life? Is it wishful thinking that a group of economists might “build a ladder” so our inflated economy can return safely to Earth without crashing? Why do we need a ladder? What would it take to build it? What might the rungs of that ladder be?

Contraction and Convergence

Contraction and Convergence is a policy framework for reducing global greenhouse gas (GHG) emissions, advocated since 1990 by the London-based Global Commons Institute, based on the twin principles of physical limits and equal rights.4 It calls for an international agreement based on steadily declining GHG limits over several decades for high emitting nations, and an emissions ceiling for low emitting nations, so that within the time frame of the agreement every nation would attain an annual GHG emissions limit based on the same per-capita allowance. While acknowledging the challenge posed by differing population growth rates, “contraction and convergence” is proposed as the only feasible basis on which the low GHG-emitting nations might agree to forego carbon-intensive economic development.

Climate change is now widely recognized as a threat to everyone, which can only be addressed globally in terms that are acceptable to both industrialized and developing nations. Yet conflicts about limiting GHG emissions may be the “tip of the iceberg” of conflicts over rights of access to the global commons in a time of diminishing availability of many essential resources—fresh water, food, and important minerals—in addition to fossil fuels. Ecological Footprint Analysis illustrates both the inequitable and the excessive use of the Earth’s productive and assimilative capacities.5

The prospect of using, or destroying, the remaining scarce resources in armed conflicts to contest control over these resources, is painful to contemplate. According to Richard Heinberg, this is not just possible, but perhaps even likely, especially if military force continues to be used to maintain the widening gap between rich and poor, and the consumption of the rich continues to deplete the Earth’s natural resources.6

Prospects for a different outcome would assuredly be enhanced by the contraction and convergence of the human enterprise as a whole. The Global Commons Institute has developed a number of scenarios about how contraction and convergence of GHG emissions might be accomplished. Developing a comprehensive contraction and convergence scenario presents greater challenges, foremost of which is how to manage the process of economic contraction in the industrialized societies.

Problems with Economic Growth

Our economics establishment seems to be almost entirely focused on maintaining economic growth by any means, including those that exacerbate the socio-economic and environmental problems that growth generates. It seems totally unrealistic that economic inequalities could somehow be reduced, while the wealthier segments of the global economy continue to increase their material prosperity. The impossibility that economic growth can be sustained indefinitely on a finite planet is simply ignored or denied.

Quaker Economist Kenneth Boulding was an exception to the establishment norm. In 1965 he gave a short talk, “Earth as a Spaceship,” in which he began to spell out the essential differences between the “cowboy economy” of an illimitable earth, and a “spaceship economy,” which would become essential for the survival of civilization.7 His ideas provided a foundation for the emerging discipline of ecological economics. Herman Daly, a leading ecological economist who was inspired by Boulding, points out that much of our current growth is “uneconomic” because the economy, although expanding by conventional measures, is clearly producing greater costs than benefits for people and the planet.8

Why does the commitment to growth continue? It is widely understood that if the economy doesn’t grow, stock values will fall, investment will decline, unemployment will increase, consumer spending will decline, inventories will pile up, people will suffer, and a downward spiral into depression may result. One example of structural economic violence is the trauma of being trapped in the downward spiral of a market economy. Because restoring growth is the only known way to prevent a depression, this is what we do.

A steady rate of economic growth creates an exponential increase in the overall scale of the economy. This is illustrated by a graph my wife, Margaret Mansfield, and I made for a workshop some years ago.9 It compares paper consumption and population growth since 1920 to show that high rates of consumption were causing greater environmental impacts than the increase in population. While world population quadrupled, U.S. paper consumption increased almost thirteen times.

We found the increase in paper production somewhat akin to the increase in the US Gross National Product, which had averaged about 3 percent a year. At an annual growth rate of 3 percent there was, in effect, an exponential increase in the overall scale of the economy, which doubled about every 25 years. What does 3 percent annual growth mean if 25 new houses were built in my town in 2001? To sustain 3 percent growth, the rough equivalent of one additional house would have to be built in each successive year, i.e., 26 in 2002, 32 in 2008, and 50 in 2025 for a total of 925. By 2050, it would be double that! How long would it take before there is no more vacant land? Yet if housing construction does not keep pace, we risk a recession with all the harmful results.

Although orthodox economics does not view growth as a problem, an increasing number of economists, among whom Kenneth Boulding was one of the first, view an economic system that requires growth for stability and prosperity to be ecologically unworkable.10 While we need the economy to stop growing to prevent more ecological damage and allow the biosphere to recover, we also need the economy to keep growing in order to prevent the financial system from taking a plunge and causing a huge depression. Meanwhile prices are rising because the demands for oil, gas, and many other material resources on which we rely, like food and water, are beginning to exceed the supplies.

See sidebar on Earth as a Spaceship, by Kenneth Boulding on Page 4

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