08 May 2008

The Sustainability of Economic Growth ~ Material vs Intangible Economics?

I sat in on today's Sustainability Lab (S-Lab) class at MIT Sloan School of Management, for a session run by Professor John Sterman, the self-described "Dr Doom" and head of the System Dynamics Group. His topic today was can continued economic growth and sustainability occur together? Put simply, if everyone on Earth tried to live the literal lifestyle of modern Americans, we would need 5-10 planets worth of resources and carrying capacity. Therefore, if economic growth meant the same material flows and consumptions per capita worldwide, then sustainability and growth are irreconcilable. Professor Sterman shared both class survey data and general stats showing that people generally have become conditioned or acculturated to the notion that they always need more -- especially more physical, material goods -- and that this is inherently unsustainable, with our collective ecological footprint obliterating the Earth several-fold.

One alternative perspective is that modern economic growth is increasingly post-industrial and enabled by ever less-impactful technologies, ever more intangible goods and services, intellectual capital, creativity and non-rival goods and increasingly services. And therefore the material fraction of the global economy will saturate and become an ever smaller percentage of the total. To give some sense of the trendlines here, take a look at these two long-term charts, first showing sources of economic activity (this is in just the US; clearly the global percentages still have a huge agricultural sector, at least in employment terms)... And second showing fraction of people employed per sector... To close the class, Professor Sterman played a stirring speech by Robert F. Kennedy challenging the ways we measure our Gross National Product, especially what's included and what's not. Especially in an age of valuable intangibles, intellectual capital, and the creation of post-industrial value, we very much need to properly account correctly...

1 comment:

Jason said...

Great post!

The problem is that this dematerialization graph is deceptive to environmental sustainability issues. Even though the number of employees in agriculture and industry has dropped, it doesn't mean that resource usage has gone down. It just means that these processes are increasingly mechanized. Precision agriculture can be conducted by automated combines run by GPS. Factories of all kinds, from pulp and paper to oil refineries, to semiconductors, have had massive layoffs while increasing the flow of material waste and energy consumption.

In fact, if you read Michael Pollan's book The Omnivore's Dilemma, you will see a description of Polyface farm, which is an example of a much less resource-intensive mode of agriculture. It gets very high yield of very high quality product while regenerating the underlying biological systems. But it's more labor intensive. So if we moved to that next generation of production from industrial agriculture, you would see those employment numbers go up.