Natural Resources Now the Limiting Economic Factor, Not Capital

tsuda/CC BY-SA 2.0

Last Friday I wrote about how although it's certainly important to connect the dots between extreme weather and climate change (which, for those with amazingly short memory, was the point of 350.org's latest day of action on Saturday), we really need to connect the economic dots as well.

We need to acknowledge that our current economic model ignores so many environmental factors, that the underlying assumptions about scarcity in the world are now the reverse of what they used to be, that this is really what's at the root of combating climate change, rather than the average person making or not making the right connections.

Well a new piece by renowned ecological economist Herman Daly gets right to this point (I'm really just cribbing from Daly's sheet on this sort of stuff...).

On the Center for the Advancement of the Steady State Economy's blog, Daly writes, in (slightly longer than I'd usually quote) part:

In yesteryear’s empty world capital was the limiting factor in economic growth. But we now live in a full world.

Consider: What limits the annual fish catch — fishing boats (capital) or remaining fish in the sea (natural resources)? Clearly the latter. What limits barrels of crude oil extracted — drilling rigs and pumps (capital), or remaining accessible deposits of petroleum — or capacity of the atmosphere to absorb the CO2 from burning petroleum (both natural resources)? What limits production of cut timber — number of chain saws and lumber mills, or standing forests and their rate of growth? What limits irrigated agriculture — pumps and sprinklers, or aquifer recharge rates and river flow volumes? That should be enough to at least suggest that we live in a natural resource-constrained world, not a capital-constrained world.

Economic logic says to invest in and economize on the limiting factor. Economic logic has not changed; what has changed is the limiting factor. It is now natural resources, not capital, that we must economize on and invest in. Economists have not recognized this fundamental shift in the pattern of scarcity. Nobel Laureate in chemistry and underground economist, Frederick Soddy, predicted the shift eighty years ago. He argued that mankind ultimately lives on current sunshine, captured with the aid of plants, soil, and water. This fundamental permanent basis for life is temporarily supplemented by the release of trapped sunshine of Paleozoic summers that is being rapidly depleted to fuel what he called “the flamboyant age.” So addicted are we to this short-run subsidy that our technocrats advocate shutting out some of the incoming solar energy to make more thermal room for burning fossil fuels! These educated cretins are also busy chemically degrading the topsoil and polluting the water, while tinkering with the genetic basis of plants, all toward the purpose of maximizing short-run growth.

If you've stuck with that quote, please read the rest of Daly's piece, it really gets the heart of not only our environmental problems, but many of our social ones as well. We currently base all of our economic expectations (central to that the notion that perpetual economic growth is possible with finite resources) on simply delusional notions of the world in front of us. It's a changed place than a generation or two ago, but our thinking and actions have remained largely unchanged.

Ignoring this, and continuing to blindingly promote growth, growth, growth, is just wishful thinking Daly says, "The wishful thought leading to such unfounded growth expectation was the belied that by growth we would cure poverty without the need to share. As the poor got richer, the rich could still get richer! Few expected that aggregate growth would be uneconomic...making us collectively poorer, not richer. But it did."

Tags: Ecological Economics

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