Limits to the Growth Debate

Four years after the worldwide debate on "limits to growth" was launched by the Club of Rome, supporters and opponents are still fighting over the wrong question. That there are ultimate limits to economic growth is incontrovertible. That there are imminent and stringent physical limits is unproven and unprovable. So the debate in these terms—limits or no no limits—is sterile. It is of far less consequence than the issues arising from changing directions of growth.

We can now reassess with some perspective the first two major studies sponsored by the Club of Rome: the report of the Meadows team at MIT, The Limits to Growth, published in 1972, and the Mesarovic and Pestel report, Mankind at the Turning Point, published in 1974. When the Club of Rome met in Philadelphia in April of this year, its pronouncements reflected a frame of mind quite different from that of 1972. Still more recently, Herman Kahn and his colleagues at the Hudson Institute have favored us with The Next 200 Years, a book evidently inspired as much by antagonism to the limits-to-growth school of thought as by affirmative faith in its own vision of technological optimism.

Before entering into detail, let me summarize my own position in four points:

1. While no trend of growth of anything can continue indefinitely in the real world, there are not global physical limits to economic growth within a time frame susceptible to plausible foresight or relevant to policy making.
2. In some world regions, notably South Asia and tropical Africa, population growth rates do indeed threaten to create a kind of Malthusian trap, and the rapid reduction of fertility is critically important to their development prospects and urgent in time.
3. For other parts of the world, both rates and directions of growth will be more influenced by changes in preferences for consumption and in attitudes toward production than by physical constraints, although higher energy costs and environmental pressures will also be important influences in generating such changes in growth patterns.
4. Probable changes in directions of growth will generate new and important issues in international economic and political relations, with both dangers and opportunities for the evolving world order.

This kind of middle-of-the-road position is not as exciting as the extremes. It requires one to be constantly leaning against any prevailing popular wind. It contests the fictitious data and dubious methodology of the Meadows team, rejects the kind of historical determinism introduced into this debate by Robert Heilbroner on the pessimistic side and Walt Rostow on the optimistic side, and is skeptical of the almost undiluted technological optimism of Herman Kahn. It also reflects amazement at the didactic arrogance of the would-be prophets—whether of doom or utopia. Even a nodding acquaintance with past projections and prophecies should generate more humility in face of the future. There is nothing in recent methodological advances in futurology, computer simulations included, which warrants the abandonment of that humility.

It is amusing to pick up Kahn's new book and to see his sweeping curves from 1776 to 2176, with the critical points of inflection exactly coinciding with this, our bicentennial year. Meadows was more modest in his time horizons, cutting off his charts at the year 2100, a mere century and a quarter hence. But the only thing one can say with certainty about economic and technological projections over one or two centuries is that they will turn out to be wrong. The future at that remove is literally unknowable, because it depends so heavily on discoveries not yet made.

Over the whole sweep of recorded history, there was probably sufficient stability for century-long projections only in early Egypt or China. There was not in classical Greece or Rome, nor in feudal Europe, and still less anywhere in the world since the age of discovery in the sixteenth century, the agricultural and industrial revolutions of the seventeenth and eighteenth centuries, the scientific and technological revolutions of the nineteenth century, the wars and decolonizations of the twentieth century, and the pace of change which is visibly around us today. The most sober scholar of modern economic growth, the Nobel prize winner Simon Kuznets, gives the greatest weight in major economic changes to what he calls "epochal inventions"—events which are unforeseeable by definition. The great ideological movements—Christianity, Islam, the American and French revolutions, or Marxism—are equally unforeseeable, as are basic institutional changes like the formation and dissolution of empires. Even simple relationships, such as the correlations between amounts of capital investment and rates of growth, turn out to be enormously variable from country to country and from time period to time period. How much more so the great discontinuities in human affairs traceable to major technological, ideological, or institutional changes.

On March 2, 1972, the day the Meadows study was unveiled with great ceremony at the Smithsonian Institution, a polite but very critical review appeared in the Washington Post by two senior staff members of Resources for the Future. To quote one paragraph from that review by Allen V. Kneese and Ronald G. Ridker: "The model results are very sensitive to particular assumptions about highly uncertain and ill-defined relationships, and the uncertainty increases (probably exponentially) as the simulation rolls out into the distant future. Any reflection of reality which may be in the model soon fades away, but the computer keeps right on charting precise lines for nearly 150 years."

I had to give a talk about the Meadows study within two weeks of its publication. Even at that early stage, I referred to "strong evidence that the Meadows study overrates the pollution hazards and the costs of pollution abatement, and underrates the possibilities of materials substitution." I felt, however, that the general thrust of the book should be taken seriously and that some of its conclusions might be right even if for the wrong reasons. I had in mind especially the urgent need for population control, for greater emphasis on internalizing environmental costs, and for what I called "giving history a push by devising incentives to shift economic growth more into services and other forms of qualitative growth, instead of simply into material-consuming quantitative growth." The Meadows contention that "overshoot and collapse" were built into the very structure of modern economic growth patterns was not persuasive. Even less believable was the notion that all growth must be stopped within the next two or three decades to avoid "overshoot and collapse" for mankind as a whole.

With four years' perspective, the scientific foundations of the Meadows study look even weaker than at the time. The study was seriously wrong in its data on resources, wrong in its assumptions on the costs of environmental control, faulty in its modeling methodology, defective in its neglect of prices as an allocator of scarce resources, and strikingly oblivious to known technological possibilities, to say nothing of plausible new technologies. There were convincing scholarly refutations in scientific and popular journals, in an early analysis by the World Bank staff, in the excellent book by the Sussex University (England) Science Policy Research Unit entitled Models of Doom, and more recently in books by the British economist Wilfred Beckerman and by Herman Kahn. Although it was not the central point of their "Second Report to the Club of Rome," the Mesarovic-Pestel study also contained very sharp criticisms of the Meadows data and methodology.

Yet none of these rebuttals has had remotely the resonance of the Meadow's book. According to the original publisher, Potomac Associates, there are now over 2.4 million copies of the Meadows book in print in various languages. One hears echoes of its theses in this season's campaign speeches by Congressman Udall, Governor Brown, and others. There is evidently a widespread will to believe in limits to growth, a phenomenon more suitable for diagnosis by a social psychologist than by a political economist. Speculating as a layman on the motives, I would guess that they contain a healthy element of concern at mankind overplaying the Faustian hand: setting in motion forces approaching those of nature in magnitude, risking major environmental crises, permitting the scale of institutions and technologies to grow seemingly beyond control of individuals or even nations, and converting technological advance and economic growth into ends in themselves instead of instrumental means for greater human satisfaction.

Those are all concerns which I share but they have to do with directions of growth rather than limits. In fact, coping with most of the visible social and economic problems of the coming decades will require more rather than less growth, provided that it is the right kind of growth. Because of its grossly oversimplified structure, treating the world as a single unit and most forms of economic growth without differential, the Meadows study must be regarded more as a distraction from the real issues than a contribution to their solution.

From the viewpoint of style, however, the Meadows book was a model of lucid and persuasive exposition. Its way of presenting the power of compound interest evidently made a deep impression on reviewers and readers. Yet that may tell us more about the naivete of these readers than about the soundness of the "limits" thesis. To any thoughtful person with even a modicum of mathematical training, it is an elementary truism that neither exponential growth nor even linear growth can continue indefinitely if there are any relevant finite limits, such as space on the surface of the earth or the amount of incoming solar radiation. To cite one simple example, continuation of recent world population growth rates of 2 percent a year would bring today's figure of about 4 billion to 6.6 billion by the end of this century (about the UN medium projections), 18 billion by the middle of the next century, 48 billion by the year 2100, and 344 billion by the year 2200. Obviously population growth will be checked somehow before the year 2100, with a slowing down of growth rates and an ultimate stabilization or decline. The interesting question is not whether there must be some limit to population growth; it is when and how and at what level, and with what differential effects on the various regions of the world.

Equal absurdities come from long-term projections of constant growth rates on the positive side. Two years ago, according to World Bank estimates, total economic output in the world averaged about $900 per capita (at price levels of the late 1960s) and had been growing for seven years at 3.1 percent year in real terms, excluding inflation. Projecting such economic growth at a constant rate brings per capita incomes by the year 2000 to about $2,000, just about the average in the richer industrialized countries of the world in 1972. An additional century moves the figure to $42,000; a further century to $900,000; and by our national fifth centennial in 2276 it hits over $9 million per capita at prices of the late 1960s. What would or could incomes of those magnitudes mean? Here again, entirely disregarding possible resource or environmental constraints, somewhere between the $2,000 and the $42,000 figure per capita—that is during the course of the twenty-first century—attitudes and preferences toward income and the uses of money would change radically.

It follows that, in a sufficiently long-term perspective, the logistic or S-shaped curve is a far more likely growth path than either exponential or linear projections. In some fields, there are also cyclical patterns of repeated ups and downs. Some climatologists believe that the past record implies the imminent return of at least a mini-ice age, if not another major glaciation. Walt Rostow and Jay Forrester are both reviving interest in the idea of fifty- to sixty-year business cycles, first identified by the Russian economist Kondratieff. Without some persuasive causal mechanism, however, it is hard to take such projections seriously.

Another and less admirable factor in the enormous response to the Meadows report doubtless resulted from the combination of spurious scientism, generated by computer printouts, with the doomsday concept of "overshoot and collapse" and the prescription calling for economic and population growth cessation before the end of this century. Since that prescription could not be accepted in the real world, least of all in the poorer countries of the world, a reader taking Meadows seriously should have followed one of two courses: either to "eat, drink, and be merry" for the next few decades, before "overshoot and collapse" set in, or else to commit suicide, since "overshoot and collapse" were unavoidable. Perhaps the experiments in existential mind expansion and in "dropping out" by some of our younger generation in recent years were the moral equivalents of those courses of action. I doubt that they were the consequences that either the Club of Rome or the Meadows team wished to promote.

It would be beating a dead horse to devote more time to the errors of the Meadows book on depletable resources and pollution control costs. If anyone remains in doubt on the first point, I recommend consulting the Goeller and Weinberg article on "The Age of Substitutability" in the special "Materials" issue of Science for last February 20. On this subject, in contrast to most of Kahn's book, I would also endorse without reservation the criticisms of Meadows in chapter IV of The Next 200 Years.

Another cardinal defect of the Meadows study was its treatment of the world as a single unit. In reality, one of the most striking features of today's world with respect to problems of growth is the bipolarity between rich countries and poor (what the current UN jargon calls developed and developing countries). That bipolarity extends to birth rates and population growth, income levels, resource consumption, and capacity for technological innovation. Only a surprisingly small number of countries are in an intermediate position, with possibilities of jumping the gap from developing to developed within the reasonably near future.

That brings us to the second Club of Rome study, the Mesarovic-Pestel volume on Mankind at the Turning Point. From the technical viewpoint, it represented a major advance over the Meadows book, partly because of its disaggregation of the world into ten reasonably homogeneous regions and partly because of much greater economic and technological sophistication in the modeling structure. Perhaps because these two aspects of the study brought it much closer to the real world, it failed to evoke anything like the enormous public response to the Meadows study. It, too, suffers from serious technical handicaps, notably in its non incorporation of plausible technological change. Moreover, many of the striking conclusions of the authors do not flow from the analysis in the model. They are rather the reactions of sensitive world citizens concerned with relations between rich and poor countries, population pressures in food-deficit crowded countries, and the dangers of nuclear proliferation. Those are all entirely legitimate concerns, but they do not need the analytical apparatus to justify them.

As to the prescription, summarized in the phrase "from undifferentiated to organic growth," even a very friendly critic must take issue with the terminology. Many things are wrong with the "growth." Those patterns have obviously disregarded some important external costs, failed to deal adequately with the community's interest in common property resources, and possibly—although here the evidence is much less convincing—given too little attention to the interests of future generations in relation to the present. There are also good reasons in many developing countries, especially in the more densely crowded ones which are poor in natural resources, to seek development strategies quite different from simply following the path of Western Europe, North America, and Japan. But both terms of the Mesarovic-Pestel phrase are confusing: "undifferentiated growth" because it is a caricature of the past and present, and "organic growth" because it is a very imprecisely defined prescription for the future.

Not having been able to attend the Club of Rome meetings in Philadelphia in April, I must judge them from press reports and some brief summary documents. Their new consensus appears to reject explicitly the notion of insurmountable physical limits to growth and to give far more attention to North-South questions between rich and poor countries, directions of growth compatible with environmental constraints in rich countries, and efforts to plan the broad directions of structural change at both the national and international levels.

I find these shifts much in accord with my own thinking and a great improvement over the Club of Rome's previous identification with the blind alley of rigid limits to growth. In the reports of the third day of the meetings, however, there is a disturbing new theme, with serious potential pitfalls, in the emphasis on cooperative action by developing nations independently of the developed countries in order "to correct the world's economic imbalances." That is a reflection of the line of thought developed by the "Third World Forum" and much in evidence in the recent Nairobi meetings of the UN Conference on Trade and Development (UNCTAD) under the rubric of "collective self-reliance."

Insofar as it implies more intensive mobilization of domestic capital and skills for accelerating development in poor countries, either singly or in groups, this theme of collective self-reliance is much to be welcomed. Insofar, however, as it implies decoupling from the markets and technology of the industrialized world (and that is precisely the objective of some of its advocates), it risks forfeiting a major potential force for accelerating economic development. And insofar as it reflects a desire for aggressive confrontation with the developed world, in the hope of emulating the massive income transfers to the oil producers, it is almost certainly counterproductive. To quote from a recent paper of my own on the Third World, "Except in the case of oil, the Third World's potential for successful economic aggression against the economic order generally, or the First World in particular, is not very great; . . . and, if there is a threat, it is largely one to the Third World itself, while the asset could bring gains to the world at large."

As always, it is a breathtaking but baffling experience to read a new book by Herman Kahn. His technological optimism is just enough qualified so that, whatever happens, a sentence can be pointed to somewhere in the pyrotechnics which will have anticipated that contingency. In general, the distant future—which none of us will live to see—is glowing with promise, while the near-term future is full of hazards and uncertainties. His discussion of technological assessment presents quite persuasively the difficulties of anticipating even the first-order, medium-term effects of important new technologies, to say nothing of their indirect consequences. But how this appreciation is to be reconciled with the uninhibited sweep of the charts to the year 2176 confounds logical analysis. Perhaps one should relax and recognize that the brilliant logician inhabits the same human envelope as the even more brilliant showman.

Whatever his other ambiguities and internal contradictions, there is no doubt that Kahn rejects the thesis of significant physical limits to growth, even in low-income and resource-poor countries. A brief comment on each of the major factors should help to illuminate my own views as well as his. I will follow the now familiar litany of population, food, raw materials, environmental quality, and energy.

So much, then, for physical constraints and limits (or nonlimits) to growth. At the start, I mentioned my own conclusion that both rates and directions of growth, outside the most crowded world regions exposed to the Malthusian trap, will be more influenced by changes in values and attitudes toward both consumption and production than by physical constraints. That conclusion is strongly reinforced by the preliminary findings of an RFF study on relations among population, resources, and environment in the United States up to the year 2025, which includes a fairly detailed disaggregation by both economic sectors and geographic regions. From some discussion with Wassily Leontief, it is also my impression that this conclusion is in line with his new studies for the United Nations.

If that view is correct, it would be well for us to close the book on the growth-limits debate and to start exploring the more difficult but more relevant terrain of social adaptation to changing consumption preferences and changing attitudes toward employment preferences and job satisfactions. In the richer countries, for example, what are the educational, employment, and life-style implications of a further shift toward services—one which substantially affects the composition of output as well as the occupational distribution? In the poorer countries, what alternative development strategies are really viable, whether focused on basic necessities, on different degrees of integration into the world economy, or on ways of avoiding some of the historical errors of the development experience of the presently rich countries while securing the benefits of high technology and high productivity?

Of special interest to me is the question of how changing growth patterns in the rich and poor countries can be geared together in some kind of world order without intolerable strains and fissures. Like Kahn, I believe that for the poorer countries, closing the income gap with the rich is much less important than making absolute advances in their levels of food, shelter, and education, and in their conditions for human dignity—in which I would give greater weight to the importance of liberty than most current writers on this subject. But I disagree with the implication—sometimes stated explicitly by American officials at international meetings—that since the gap is itself a great force for development, the best thing the North can do to promote development in the South is to focus exclusively on our own prosperity. There is a ring of Victorian upper-class smugness about that proposition—a kind of international "Upstairs, Downstairs" philosophy, which is unlikely to carry conviction below the stairs.

At the same time, there is a close linkage in the present world economy between high growth rates in the industrialized world and developmental opportunities for much of the developing world—a linkage through markets for raw materials, tropical foodstuffs, and labor-intensive manufactured goods, and through capital transfers. That linkage will not be altered by UN resolutions or by unilateral action of the developing countries alone. What kinds of trade and investment and resource policies might help to modify it in ways acceptable to all concerned is a question on which I plan to initiate a substantial research project early next year. I hope that it can be paralleled by realistic future-looking studies in both rich countries and poor.