.

I think all of us here today would acknowledge that we’ve lost

that sense of shared prosperity.

Barack Obama, 27 March 20081

Prosperity is about things going well for us: in accordance with our

hopes and expectations.2 ‘How’s life?’ we ask each other. ‘How are

things?’ Everyday exchanges convey more than casual greeting.

They reveal a mutual fascination for each other’s well-being.

Wanting things to go well is a common human concern.

It’s understood that this sense of things going well includes some

notion of continuity. We aren’t inclined to think that life is going

swimmingly, if we confidently expect things to fall apart tomorrow.

‘Yes, I’m fine, thanks. Filing for bankruptcy tomorrow.’ Such a

response wouldn’t make sense. There is a natural tendency to care

about the future.

There is a sense too in which individual prosperity is curtailed in

the presence of social calamity. That things are going well for me

personally is of little consolation if my family, my friends and my

community are all in dire straits. My prosperity and the prosperity

of those around me are intertwined. Sometimes inextricably.

Writ large, this shared concern translates itself into a vision of

human progress. Prosperity speaks of the elimination of hunger and

homelessness, an end to poverty and injustice, hopes for a secure

and peaceful world. And this vision is important not just for

Prosperity Lost

1

altruistic reasons but often too as reassurance that our own lives are

meaningful. It brings with it a comforting sense that things are

getting better on the whole – rather than worse – if not always for

us then at least for those who come after us. A better society for our

children. A fairer world. A place where those less fortunate will one

day thrive. If I cannot believe this prospect is possible, then what

can I believe? What sense can I make of my own life?

Prosperity in this sense is a shared vision. Echoes of it inhabit

our daily rituals. Deliberations about it inform the political and

social world. Hope for it lies at the heart of our lives.

So far so good. But how is this prospect to be attained? Without

some realistic way of translating hope into reality, prosperity

remains an illusion. The existence of a credible and robust mechanism

for achieving prosperity matters. And this is more than just a

question of the machinery of doing well. The legitimacy of the

means to live well is part of the glue that keeps society together.

Collective meaning is extinguished when hope is lost. Morality

itself is threatened. Getting the mechanism right is vital.

One of the key messages of this book is that we’re failing in

that task. Our technologies, our economy and our social aspirations

are all mis-aligned with any meaningful expression of

prosperity. The vision of social progress that drives us – based on

the continual expansion of material wants – is fundamentally

untenable. And this failing is not a simple falling short from

utopian ideals. It is much more basic. In pursuit of the good life

today, we are systematically eroding the basis for well-being

tomorrow. We stand in real danger of losing any prospect of a

shared and lasting prosperity.

But this book isn’t a rant against the failings of modernity. Nor

is it a lament on the inevitability of the human condition. There are

undoubtedly some immutable constraints on our prospects for a

lasting prosperity. The existence of ecological limits to human

activity maybe one of these. Aspects of human nature may turn out

Prosperity without Growth

2

to be another. Taking heed of these constraints is central to the

spirit of this investigation.

The overriding aim of this book is to seek viable responses to the

biggest dilemma of our times: reconciling our aspirations for the

good life with the constraints of a finite planet. The analysis in the

following pages is focused on finding a credible vision of what it

means for human society to flourish in the context of ecological

limits.

Prosperity as growth

At the heart of the book lies a very simple question. What can prosperity

possibly look like in a finite world, with limited resources and

a population expected to exceed 9 billion people within decades?3

Do we have a decent vision of prosperity for such a world? Is this

vision credible in the face of the available evidence about ecological

limits? How do we go about turning vision into reality?

The prevailing response to these questions is to cast prosperity in

economic terms and to call for continuing economic growth as the

means to deliver it. Higher incomes mean increased choices, richer

lives, an improved quality of life for those who benefit from them.

That at least is the conventional wisdom.

This formula is cashed out (almost literally) as an increase in the

gross domestic product (GDP) per capita. The GDP is broadly

speaking a measure of ‘economic activity’ in a nation or region.4 As

we shall see later, there are good grounds to question whether such

a crude measure is really sufficient. But for now it’s a fair reflection

of what is meant, in broad terms, by rising income. A rising per

capita GDP, in this view, is equivalent to increasing prosperity.5

This is undoubtedly one of the reasons why GDP growth has

been the single most important policy goal across the world for

most of the last century. Such a response clearly still has an appealing

logic for the world’s poorest nations. A meaningful approach to

Prosperity Lost

3

prosperity must certainly address the plight of the 1 billion people

across the world who are living on less than $1 a day – half the price

of a small cappuccino in Starbucks.6

But does the same logic really hold for the richer nations, where

subsistence needs are largely met and further proliferation of

consumer goods adds little to material comfort? How is it that with

so much stuff already we still hunger for more? Might it not be

better to halt the relentless pursuit of growth in the advanced

economies and concentrate instead on sharing out the available

resources more equitably?

In a world of finite resources, constrained by strict environmental

limits, still characterized by ‘islands of prosperity’ within ‘oceans

of poverty’,7 are ever-increasing incomes for the already-rich really a

legitimate focus for our continued hopes and expectations? Or is

there perhaps some other path towards a more sustainable, a more

equitable form of prosperity?

We’ll come back time and again to this question and explore it

from a variety of different perspectives. But it’s worth making quite

clear here that to many economists the very idea of prosperity without

growth is a complete anathema. Growth in the GDP is taken

for granted. Reams and reams have been written about what it’s

based on, who’s best at making it happen and what to do when it

stops happening. Far less is written about why we might want it in

the first place.

But the relentless quest for more that lurks within the conventional

view of prosperity is not without some claim to intellectual

foundation. In short, the reasoning goes something like this. The

GDP counts the economic value of goods and services exchanged

on the market. If we’re spending our money on more and more

commodities it’s because we value them. We wouldn’t value them if

they weren’t at the same time improving our lives. Hence a continually

increasing per capita GDP is a reasonable proxy for a rising

prosperity.

Prosperity without Growth

4

But this conclusion is odd precisely because prosperity isn’t obviously

synonymous with income or wealth. Rising prosperity isn’t

self-evidently the same thing as economic growth. More isn’t necessarily

better. Until quite recently, prosperity was not cast specifically

in terms of money at all; it was simply the opposite of adversity or

affliction.8 The concept of economic prosperity – and the elision of

rising prosperity with economic growth – is a modern construction.

And it’s a construction that has already come under considerable

criticism.

Amongst the charges against it is that growth has delivered its

benefits, at best, unequally. A fifth of the world’s population earns

just 2 per cent of global income. The richest 20 per cent by contrast

earn 74 per cent of the world’s income. Huge disparities – real

differences in prosperity by anyone’s standards – characterize the

difference between rich and poor. Such disparities are unacceptable

from a humanitarian point of view. They also generate rising social

tensions: real hardships in the most disadvantaged communities

which have a spill-over effect on society as a whole.9

Even within the advanced economies, inequality is higher than

it was 20 years ago. While the rich got richer, middle-class incomes

in western countries were stagnant in real terms long before the

current recession. Far from raising the living standard for those who

most needed it, growth let much of the world’s population down

over the last 50 years. Wealth trickled up to the lucky few.

Fairness (or the lack of it) is only one of the reasons to question

the conventional formula for achieving prosperity. Another is the

growing recognition that, beyond a certain point at least, continued

pursuit of economic growth doesn’t appear to advance and may

even impede human happiness. Talk of a growing ‘social recession’

in advanced economies has accompanied the relative economic

success of the last decade.10

Finally, and perhaps most obviously, any credible vision of prosperity

has to address the question of limits. This is particularly true

Prosperity Lost

5

of a vision based on growth. How – and for how long – is continued

growth possible without coming up against the ecological

limits of a finite planet?

The question of limits

Concern over limits is as old as the hills. But its recent history can

be thought of as having three distinct phases. Late in the 18th

century, the Parson Thomas Robert Malthus raised it in his enormously

influential Essay on Population. In the 1970s, it was raised

again in a different form in the Club of Rome’s Limits to Growth

report. The third phase is the one we find ourselves in now:

concerns over climate change and ‘peak oil’11 compete for attention

with fears of economic collapse.

Raising the spectre of Malthus is dangerous, of course. He’s

roundly condemned for all sorts of reasons. Some of them – such

as his jaundiced view of poverty and fierce opposition to the Poor

Laws – quite valid. It was Malthus, after all, who gave economics

the reputation for being a ‘dismal science’. So it might as well be

said upfront that Malthus was wrong. At least in so far as the particulars

of his claims.12

His argument (massively condensed) was that growth in population

always runs faster than growth in the resources available to feed

and shelter people. So sooner or later the population expands

beyond the ‘means of subsistence’ and some people – the poorest

inevitably – will suffer.

That he failed to see (and even defended) the structural inequalities

that kept people locked into poverty is one of Malthus’ failings.

But he was also wrong about the maths. The global population is

now more than six times the size it was in Malthus’ day. And this is

partly because the means of subsistence expanded considerably faster

than population did – completely counter to Malthus’ premise. The

global economy is 68 times bigger than it was in 1800.13

Prosperity without Growth

6

He missed completely the longer term implications of the

massive technological changes already taking place around him. Nor

could he have foreseen that with development would come a considerable

slowing down of the rate of population increase. Today,

increasing affluence is driving resource throughput faster than population

growth is.14 The means of subsistence more than kept pace

with people’s propensity to reproduce, largely because of the easy

availability of cheap fossil fuels. And yet the massive increases in

resource use associated with a global economy almost 70 times

bigger than the one in his day, might still have given Parson Malthus

pause for thought. How could such increases possibly continue?

That was the question asked by a group of scientists commissioned

by the Club of Rome in the 1970s to explore the question

of ecological limits. Donella and Dennis Meadows and their

colleagues looked at exponential growth in resource use, population

and economic activity since the industrial revolution and asked

themselves a very simple question. How could these kinds of curves

(Figure 1.1(a)) possibly continue in the way conventional economic

projections supposed they would?

They knew that natural ecosystems obeyed very different kinds

of curve (Figure 1.1(b)). Could it be that the massive advances in

human progress were after all nothing more than the steep early

growth associated with the left hand side of a bell-shaped curve?

And that inevitably, just like any other ecosystem that exceeds its

resource base, we were heading for collapse?

The Meadows argued that resource scarcities would push

prices up and slow down the possibilities for future growth.

Eventually, if material throughput wasn’t curtailed, the resource

base itself would collapse and with it the potential for continued

economic activity – at least, at anything like the scale anticipated

by the optimists.

Collecting together as much data as they could find on resource

extraction rates and available reserves, they set themselves the task

Prosperity Lost

7

of figuring out when the turning points would arrive – the points

at which real scarcity might begin to bite.

As it turned out, and as they themselves were later to admit, they

also got it wrong. But not by anything like as much as Malthus got

it wrong. Back in the 1970s, the Meadows expected to see significant

resource scarcities before the new Millennium. That didn’t

happen. Remember this was almost 40 years ago when basic data

on natural resources were even scarcer than they are today. But the

prospect of scarcity wasn’t far behind their expectations.15

Most significantly, the peak oil debate had already emerged as a

fiercely contentious issue by the year 2000. The ‘peak-ists’ argued

that the peak in oil production was only a matter of years away,

possibly already on us. Their opponents pointed to the massive

reserves still lying in the tar sands and oil shales. Getting the oil out

Prosperity without Growth

8

b) Ecological overshoot

Time

a) Economic growth

Figure 1.1 Growth curves for economic and ecological systems

Source: Author

might be costly and environmentally damaging, but absolute

scarcity was still a long way away, claimed the optimists.

Meanwhile the price of oil rose steadily. Oil price hikes had

already shown they have the potential to destabilize the global

economy and threaten basic securities. In July 2008 oil prices

reached $147 a barrel (Figure 1.2). Though they fell sharply in the

following months, the threat of peak oil hasn’t gone away. The

rising trend had returned by early 2009.

Even the International Energy Agency (IEA) now suggests that

the ‘peak’ could arrive as early as 2020. Other commentators

believe it could be even sooner. Oil will not disappear beyond that

peak. But it will be scarcer and more costly to extract. The era of

cheap oil would to all intents and purposes be gone and the

economics of energy would be irrevocably altered as a result.16

Oil Food Metals

Figure 1.2 Global commodity prices: January 2003–July 200917

Source: Drawn by the author from data in note 17.

Oil is not the only commodity for which resource scarcity will

be an issue within decades. Food prices also rose sharply in the year

to July 2008, sparking riots on the streets in some countries.

Beyond the spike, the underlying trend appears to be rising once

again (Figure 1.2). Productive land, as Malthus himself recognized,

is the ultimate resource when it comes to basic subsistence.

Conflicts over land use, particularly related to the use of land for

growing bio-fuels, were certainly one of the factors pushing food

prices up through 2008. No-one imagines these conflicts will

become easier over time.

The trend in mineral prices has been rising too. This isn’t

surprising. Demand is growing and even at current extraction rates,

a number of important minerals measure their time to exhaustion

in decades rather than centuries. As extraction rates increase, the

horizon of scarcity shortens.

If the whole world consumed resources at only half the rate the

US does, for example, copper, tin, silver, chromium, zinc and a

number of other ‘strategic minerals’ would be depleted in less than

four decades. If everyone consumed at the same rate the US does

today, the time horizon would be less than 20 years. Some rare

earth metals will be exhausted in a decade even at current global

consumption rates.18

All kinds of factors were at play during the commodity price

‘bubble’ of 2008. Some of them were just about short-term policy.

Everyone agrees that it’s difficult to glean much about real scarcity

from short-run price fluctuations. This fact is seized on by optimists

wanting to downplay the question of resource scarcity. But it’s also

worrying that commodity prices are just too volatile to offer reliable

information about imminent scarcity. The threat of scarcity was

enough to send them rocketing. They were equally prone to collapse

in the face of recession. Through both peak and trough, the underlying

physical resource base moved inexorably towards exhaustion.

The market is just too self-obsessed to measure this.

Prosperity without Growth

10

As an economist commented to me in the middle of the credit

crisis: ‘we didn’t get the recession that many economists, looking at

the commodity bubble, thought we’d get, the one driven by high

resource prices’. But one thing is for sure: that recession is coming.

Sooner or later. And when that happens, the price impact will be

no less shocking than it was during 2008. Its impact on the economy

will be devastating.

This third phase of the limits debate is different from the last

two. Resource scarcity – the problem of ‘sources’ in the language of

environmental economists – is only part of the concern. The debate

is driven even more strongly by the problem of ‘sinks’ – the capacity

of the planet to ‘assimilate’ the environmental impacts of

economic activity. ‘Even before we run out of oil,’ explains ecologist

Bill McKibben, ‘we’re running out of planet.’19

Climate change is one of these sink problems. It’s brought about

by the accumulation of greenhouse gases in the atmosphere – accelerated

by human activities, especially the burning of fossil fuels.

The ability of the climate to assimilate these emissions without

incurring ‘dangerous’ climate change is fast running out.

Brought to the world’s attention in the late 1980s by climate

scientist James Hansen and others, climate change has risen up the

political agenda inexorably over the last two decades. Its visibility

was given a massive boost by the influential Stern Review published

in 2006. A former World Bank economist, Nicholas Stern was

asked to lead a review of the economics of climate change for the

UK Treasury. The review concluded that a small early hit on GDP

(perhaps as low as 1 per cent of GDP) would allow us to avoid a

much bigger hit (perhaps as high as 20 per cent of GDP) later on.20

It’s telling that it took an economist commissioned by a government

treasury to alert the world to things climate scientists – most

notably the Intergovernmental Panel on Climate Change (IPCC) –

had been saying for years. This is partly a testament to the power of

economists in the policy world. But the impact of the Stern report

Prosperity Lost

11

was also due to the seductive nature of its message. Climate change

can be fixed, it said, and we’ll barely notice the difference.

Economic growth can go on more or less as usual.

We’ll have occasion to look at that message a bit more closely in

what follows. The history of climate policy certainly suggests some

caution in believing things will be that easy. The Kyoto Protocol

committed the advanced economies to greenhouse gas emission

reductions equivalent to about 5 per cent over 1990 levels by 2010.

But things haven’t worked out that well. Globally, emissions have

risen by 40 per cent since 1990.

In the meantime, the science itself has moved on. The Stern

Review took as its target the task of stabilizing carbon emissions

in the atmosphere at 550 parts per million (ppm).21 Most scientists

– and Stern himself – now accept that that target won’t

prevent dangerous anthropogenic climate change. The IPCC’s

Fourth Assessment Report argues that a 450 ppm target will be

needed if climate change is to be restricted to an average global

temperature increase of 2°C.22 Achieving that target could mean

reducing global emissions by up to 85 per cent over 1990 levels

by 2050.23

Two articles published in the journal Nature in April 2009 challenge

even that conclusion. The authors argue that what matters is

the total greenhouse gas budget we allow ourselves over the period

to 2050. Global atmospheric concentrations are already at

435 ppm. And if we want a 75 per cent chance of staying below

2°C, the global economy can only afford to emit a total of 1 thousand

billion tonnes of carbon dioxide (CO2) between the year 2000

and the year 2050. Crucially, they show that by 2008 we had

already used up a third of this budget. Staying within the budget is

going to be more demanding even than existing 450 ppm stabilization

scenarios suggest.24

The message from all this is a profoundly uncomfortable one.

Dangerous climate change is a matter of decades away. And we’re

Prosperity without Growth

12

using up the climate ‘slack’ too quickly. It may take decades to

transform our energy systems. And we have barely started on that

task. As the science improves it becomes clearer that a warming

world may pose the gravest threat to survival we face. Though it

came late to the party, the climate may just turn out to be the

mother of all limits.

Beyond the limits

This brief sketch of ecological limits does no justice at all to the

accumulating wealth of understanding about resource scarcity or

climate change. It hasn’t even touched on questions of rapid deforestation,

historically unprecedented biodiversity loss, the collapse of

fish stocks, water scarcity or the pollution of soil and water

supplies. Interested readers must go elsewhere for detailed discussions

of these issues.25

In a sense, the details are not the point. Nobody seriously

disagrees with the assessment of impacts. It’s now widely acknowledged,

for example, that an estimated 60 per cent of the world’s

ecosystem services have been degraded or over-used since the mid-

20th century.26

During the same period of time the global economy has grown

more than 5 times. If it continues to grow at the same rate, it will

be 80 times bigger in 2100 than it was in 1950.27 This extraordinary

ramping up of global economic activity has no historical

precedent. It’s totally at odds with our scientific knowledge of the

finite resource base and the fragile ecology on which we depend for

survival.

A world in which things simply go on as usual is already inconceivable.

But what about a world in which an estimated 9 billion

people all achieve the level of affluence expected in the OECD

nations?28 Such an economy would need to be 15 times the size of

today’s economy (75 times what it was in 1950) by 2050 and 40

Prosperity Lost

13

times bigger than today’s economy (200 times bigger than in 1950)

by the end of the century.29 What on earth does such an economy

look like? What does it run on? Does it really offer a credible vision

for a shared and lasting prosperity?

For the most part, we avoid the stark reality of these numbers.

The default assumption is that – financial crises aside – growth will

continue indefinitely. Not just for the poorest countries, where a

better quality of life is undeniably needed, but even for the richest

nations where the cornucopia of material wealth adds little to

happiness and is beginning to threaten the foundations of our wellbeing.

The reasons for this collective blindness are (as we shall see in

more detail later) easy enough to find. The modern economy is

structurally reliant on economic growth for its stability. When

growth falters – as it did dramatically during the latter stages of

2008 – politicians panic. Businesses struggle to survive. People lose

their jobs and sometimes their homes. A spiral of recession looms.

Questioning growth is deemed to be the act of lunatics, idealists

and revolutionaries.

But question it we must. The idea of a non-growing economy may

be an anathema to an economist. But the idea of a continually growing

economy is an anathema to an ecologist. No subsystem of a finite

system can grow indefinitely, in physical terms. Economists have to

be able to answer the question of how a continually growing

economic system can fit within a finite ecological system.

The only possible response to this challenge is to suggest – as

economists do – that growth in dollars is ‘decoupled’ from growth

in physical throughputs and environmental impacts. But as we shall

see more clearly in what follows, this hasn’t so far achieved what’s

needed. There are no prospects for it doing so in the immediate

future. And the sheer scale of decoupling required to meet the

limits set out here (and to stay within them while the economy

keeps on growing in perpetuity) staggers the imagination.

Prosperity without Growth

14

In short, we have no alternative but to question growth. The

myth of growth has failed us. It has failed the 1 billion people who

still attempt to live on half the price of a cup of coffee each day. It

has failed the fragile ecological systems on which we depend for

survival. It has failed, spectacularly, in its own terms, to provide

economic stability and secure people’s livelihoods.

Of course, if the current economic crisis really does indicate (as

some predict) the end of an era of easy growth, at least for the

advanced nations, then the concerns of this book are doubly relevant.

Prosperity without growth is a very useful trick to have up

your sleeve when the economy is faltering.

The uncomfortable reality is that we find ourselves faced with

the imminent end of the era of cheap oil, the prospect of steadily

rising commodity prices, the degradation of air, water and soil,

conflicts over land use, resource use, water use, forestry and fishing

rights, and the momentous challenge of stabilizing the global

climate. And we face these tasks with an economy that is fundamentally

broken, in desperate need of renewal.

In these circumstances, a return to business as usual is not an

option. Prosperity for the few founded on ecological destruction

and persistent social injustice is no foundation for a civilized

society. Economic recovery is vital. Protecting people’s jobs – and

creating new ones – is absolutely essential. But we also stand in

urgent need of a renewed sense of shared prosperity. A deeper

commitment to justice in a finite world.

Delivering these goals may seem an unfamiliar or even incongruous

task to policy in the modern age. The role of government

has been framed so narrowly by material aims and hollowed out by

a misguided vision of unbounded consumer freedoms. The concept

of governance itself stands in urgent need of renewal.

But the economic crisis presents us with a unique opportunity

to invest in change. To sweep away the short-term thinking that has

plagued society for decades. To replace it with considered policy

Prosperity Lost

15

capable of addressing the enormous challenge of delivering a lasting

prosperity.

For at the end of the day prosperity goes beyond material pleasures.

It transcends material concerns. It resides in the quality of

our lives and in the health and happiness of our families. It is

present in the strength of our relationships and our trust in the

community. It is evidenced by our satisfaction at work and our

sense of shared meaning and purpose. It hangs on our potential to

participate fully in the life of society.

Prosperity consists in our ability to flourish as human beings –

within the ecological limits of a finite planet. The challenge for our

society is to create the conditions under which this is possible. It is

the most urgent task of our times.