Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Infinite growth in a finite world?

By John Töns - posted Monday, 15 June 2009

What is the prognosis for planet Earth? That question can be readily answered. Planet Earth is doing rather well and will continue so to do. Unfortunately the same cannot be said for most of life on earth.

In his book The Moral Consequences of Economic Growth (Benjamin Friedman, 2005) Friedman made the case that without economic growth and continuing economic growth there would be no progress. As far as Friedman was concerned the upside of economic growth was such as to outweigh any possible downside. This is still very much the view throughout the developed world. We point to advances in standards of living, advances that have been made on the back of economic growth.

The current economic crisis and environmental crisis highlight the shortcomings of this economic growth mantra.


To understand the economic crisis we have to take a closer look at the American economy. The American economy has been the envy of many; countries long to be as prosperous as the USA. If you look at the history of American wages and plot it on a graph along with company profits you observe an interesting pattern. Up to around about 1976 American wages were growing in real terms at the same rate as business profits were growing. Up to 1976 increases in the real wages of American workers meant that they could use those increases to purchase consumer goods. Unsecured credit was virtually unknown and certainly was not needed.

Part of the reason for that prosperity was that the USA had a virtual monopoly in the production of manufactured goods. Two world wars had reduced much of the rest of the world to beggar status. However, by the early 70s Europe and Japan had begun to challenge American manufacturing dominance. To maintain profitability we find for the first time there was some pressure on wages in the USA.

Two other things happened in the early 70s to put downward pressure on wages. The first relates to the technological revolution which meant that companies could maintain profitability with fewer workers. The other was the women’s movement. From the mid-70s the labour pool was effectively doubled. The impact of the doubling of that labour pool can be seen in a business like Wal-Mart. It employs the same number of employees as General Motors did in the 30s yet in real terms the wages of Wal-Mart’s employees are about a third of what GM’s employees were taking home in the 30s.

If one plots American businesses’ profitability we see that economic progress has meant profits have been increasing steadily ever since the 1880s. Wages in the USA had kept pace with that increase in profitability until we got to 1976: from there wages plateau. The reasons are not hard to find. American workers had lost their bargaining power - more workers competing for the same jobs meant that they could be paid less. Initially the lack of spending power was disguised by the fact that in many families there were now two breadwinners but just as two can live as cheaply as one they can also be paid as cheaply as one.

Businesses were flush with cash and this gave banks a problem - they had to find new ways of using the money that was being deposited and hence came the credit card. America’s economic growth after 1976 was no longer fuelled by the workers spending their wages on consumer goods, it was/is being fuelled by credit. How many people reading this buy the goods they want on credit? How many are looking at a monthly statement that sees them sinking further and further in debt, month by month? How many people are technically insolvent?

The American model has been successfully exported throughout most of the world; the IMF and World Bank expect developing nations to adopt this model, and when they do there are often disastrous consequences. Now that this house of cards has come crashing about our ears the only solution appears to be more spending - yet more spending on consumer goods so that growth can be restored to achieve prosperity.


For some time now scientists have looked at economic theory in disbelief. It claims for itself the status of a science yet its theories seem to be divorced from the real world. In particular, no one has been able to show how one can have infinite growth in a finite world. Space does not permit for me to enlarge on this but for those wishing to test my argument I would recommend that they look at this public lecture. Bartlett demonstrates the essential shortcomings in a public policy that is predicated on economic and population growth.

Paradoxically, the economic growth paradigm, although it can be credited with the improvements in the quality of life that those in the developed world enjoy, has not led to an increase in happiness. In fact the reverse is the case. As we have seen with the various stimulus packages, economic growth relies on consumption. To encourage us to consume not only is credit readily available but we are also assailed by advertising encouraging us to consume more. At the heart of all that advertising is a message of dissatisfaction; we cannot be happy unless we fill our homes with the latest gadgets.

To finance our lifestyles and stay on top of our credit cards we work longer and longer hours. The result of this is that our consumerism not only does not bring happiness but it is bringing the world’s ecosystem close to collapse (see here).

So much for the good news; now for the really bad news - we can do something about it! Unfortunately doing something about it does not mean signing yet another petition, or buying some gadget that will solve our problems. Taking action means recognising that human ingenuity has served us well in the past and can serve us well in the future. Essentially what we can do, and should do if we are concerned, is work within our own communities to ensure that our local community has the resilience to cope with the challenges we face. If you want to know how you can initiate such action then have a look here.

You won’t save planet earth but you just might help ensure the survival of human life on earth.

  1. Pages:
  2. Page 1
  3. All

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

38 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

John Töns is President of the Zero Carbon Network a network established to promote clear thinking about the issues associated with climate change. In addition to operating the only zero carbon boarding kennels in South Australia he is also completing a PhD at Flinders University in the area of Global Justice. John is a founding member of a new political party Stop Population Growth Now.

Other articles by this Author

All articles by John Töns

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 38 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy