9th Feb 2023 published by: Robert Phillips
COMMENTS ON THE 50TH ANNIVERSAY OF THE LIMITS TO GROWTH1
by
Robert Phillips
In 1972, a high-powered think tank called the Club of Rome published The Limits to Growth, a book that caused considerable interest and controversy at the time.
It was a book of predictions rather than prophecies, relying on a complex computer model and trend analysis of five key variables:
- World population growth
- Amount of arable land
- Amount of non-renewable resources (especially oil)
- Capital for investment; and
- Pollution
The modelling was actually done by a team at the Massachusetts Institute of Technology (MIT), who had use of some of the most sophisticated computers available, enabling them to simulate the world in a large scale computer model.
As someone who worked in the field of risk modelling, albeit in a different area, I find this approach fascinating. Their trend analysis revealed that the growth in world population, combined with shortages of critical resources and growth of pollution, would lead to a series of crises and disasters in the early to middle part of this century, leading to the collapse of civilisation and the world’s population.
The approach of the Club of Rome was essentially Malthusian. Malthus predicted doom because population increased by geometric progression, that is, exponentially, while food production only increased by arithmetic progression, that is, linearly. This meant that sooner or later, population would exceed food production, and many people would starve.
The Club of Rome likewise predicted that population growth would exceed the capacity of limited resources to support it, and eventually, population would collapse. It started by taking a ‘base’ case, which assumed that increases in these variables would continue according to existing trends. Then they ‘tweaked’ the figures by making assumptions, for example, about producing food production by technological advances. (The Green Revolution had only just started at that time.)
No matter how much they tweaked the figures, the result was always the same: population ultimately collapsed. All that technological advances did was to delay the collapse by a few decades at most, and at the expense of pollution being worse. This is not such a surprising conclusion. Species tend to expand their numbers until they reach the limits supportable in their environment. After that, there is often a dying off, followed by subsequent renewal.
Fifty years on, it is interesting to look at the Club of Rome’s predictions, and see how they compare with what has actually happened. Let us, therefore, look at their five key variables, to compare prediction with reality.
World population growth
The Limits to Growth Scenario predicted that the world’s population would quadruple in sixty-odd years from 3.6 billion in 1970, to over fourteen billion in the 2030s. In a subsequent report Mankind at the Turning Point2, they made a series of population predictions based on the dates of implementation of birth control policies in the developing world. Their second-lowest estimate, some 6.5 billion people in the developing world by now, has turned out to be the most accurate. [p.79] Along with 1.5 billion in the developed world, gives a total of eight billion, which the world has just reached this year. This is considerably below the predictions in The Limits to Growth. The UN now predicts that the world’s population will level out around ten billion in the 2080s.
Amount of arable land
The amount of arable land may not have increased markedly since the 1970s, but, at least until recently, food production was generally able to keep up with population increase. Not only the proportion but the absolute number of people facing extreme poverty and starvation had actually decreased somewhat. The effects of the COVID pandemic and the war in Ukraine may have caused some deterioration in the last three years.
From an Australian perspective, the fact that we have poor soils and variable water availability means that we may face some growing challenges as climate change has more effect.
Amount of non-renewable resources (especially oil)
Oil supply and prices figured prominently in the Club of Rome’s deliberations, given the world was preoccupied with oil price hikes at the time (1972-74). Yet despite concerns that we may be approaching ‘peak oil’, after which oil production would decline, there is no indication of that happening yet. Oil prices have fluctuated widely over the years, but increases in the price of oil have led to more fuel efficient cars, and recently, to the growth in electrical vehicles and the exploitation of shale oils. We do not appear to be running out of oil any time soon.
There are, of course, other resources of which we may run short, such as lithium for batteries. However, shortages of resources usually leads to more exploration and finding more reserves, and new technologies can, as in the case of oil, lead to more efficient usage or substitutes.
In short, shortages of resources may not be as critical as the Club of Rome predicted.
Capital for investment
This is one area where the Club of Rome may have got it right. They were particularly concerned about whether that rate of investment in capital assets exceeded the rate of depreciation. If so, the economy would continue to grow; if not, it would decline.
Although economies are still growing, the Club of Rome did make one accurate prediction. It predicted financial crises in the earlier part of this century. We have already had one, the Global Financial Crisis (GFC) of 2008-09, and the world’s financial systems since then have looked shaky.
The demands for funds for investment by governments, businesses and individuals appears to be insatiable. But the funds available for lending are limited. To some extent, we have circumvented that problem by extension of credit. But the demands for loans in the lead up to the GFC lead to a hyper-extension of credit: credit based on credit based on credit. The whole thing was like a house of cards where it took only one ‘puff of wind’, namely the Federal Reserve increasing interest rates to counter inflation in 2008 to cause the whole pack to come tumbling down. Governments had to spend billions to prop up their financial sectors. The financial sector is unique among economic sectors because if it goes down, so do all the other sectors.
Will we face similar crises in future? I suspect so. One thing I learnt from the GFC is that no one, not even the large financial institutions, controls the world’s economic and financial systems: they are too large and two complex for anyone to control them.
Whether subsequent crises result in the sudden collapse of the world’s economy, or whether it deteriorates over a number of years, it will have serious consequences.
Pollution
The Club of Rome was correct in predicting that pollution levels would rise, although it would probably be surprised by the forms it has taken. At the time, the concern was that the amounts of particulate matter being put into the atmosphere, thereby reflecting sunlight back in to space, and perhaps triggering an ice age – a process known as ‘global dimming’.
In fact, of course, the opposite is happening. The increasing amounts of carbon dioxide and other greenhouse gases actually means that the planet is warming up – a process known as ‘global warming’.
This century will probably be unique in human history in that it may be dominated by one issue: how quickly can we reduce our greenhouse gas emission, how much will the world warm up, and what will the consequences be? This last question is perhaps the most compelling. The unpredictability of climate change may be the biggest threat to face the human race and the world’s economies.
- Meadows, D.L. et alia, The limits to growth: a report for the Club of Rome’s project on The Predicament of Mankind, New York and Washington, 1972
- Mesarovic, M. and Pestel, E., Mankind at the turning point: the second report to the Club of Rome, London 1975.
