CAPITALISM: GROWTH, GREED AND COLLAPSE An NPG Forum Paper by Lindsey Grant
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” – Economist Kenneth Boulding, 1977 If there were one message I could imprint on the American mind, it would be this: Perpetual physical growth is impossible on a finite planet.... the question inescapably becomes, not should human growth stop? but when? How should it stop? by conscious efforts to limit fertility, or by rising mortality?... The distinguishing characteristic of this century is that growth has reached the point at which this choice has become an immediate issue. (Juggernaut: Growth on a Finite Planet, 1996) I wrote that paragraph 18 years ago, and the only change I would now make is to change the tense. Deploying the techniques of Capitalism and new technologies in food production and public health, we have engineered an astounding growth in human populations and their demands on Earth’s resources. We have entered the zone of overshoot, in which those resources are insufficient to maintain the populations dependent upon them, and human overload is damaging the biosphere and reducing the Earth’s capacity to support us and other creatures. In humans’ brief time on Earth, various civilizations have experienced Darwinian growth, and crashed when they ran down or ran through their resources. None have grown so spectacularly as the world-wide system of Capitalism, none of them systematically structured themselves to pursue growth, as Capitalism has done, and none have faced a systemic collapse as total as the world economy now faces.
production for private profit, and a labor market working for the capitalists for hourly wages. That structure freed the capitalists from any obligation to labor other than the payment of whatever wage the market required, and it generated a hostile class confrontation. However, it also organized the industrial revolution, led to the effective employment of new technologies: steam power, and then electricity and commercial agriculture. The capitalists sought free trade to create larger markets and open new sources of food and raw materials. Economies of scale brought improved managerial techniques. Together, the innovations led to a period of growth unlike anything in previous history, and those who prospered came to believe in growth as the natural order of society. Population growth took off at the same time. The curve has been astonishing. From about 500 million in 1700, world population has now passed 7.1 billion, a thirteen-fold growth in twelve generations – and 85% of that growth has occurred since 1900. As its money and political power grew, Capitalism created the legal system and the machinery to drive growth without the acceptance of its limits. The institutions of capitalism are designed to promote economic growth, and they succeeded. •
The limited liability corporation loads the odds in favor of the entrepreneur who takes risks in the pursuit of growth. If he fails, he loses only the money he put in the corporation, and usually not all of that.
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Starting in 1933, the major governments of the world abandoned the gold standard and
CAPITALISM AND GROWTH Capitalism dates from the 1700s. Its unique institutions are private ownership of the means of NPG-139
January 2014 (second edition)