We previously covered Keith’s ideas and how it relates to sustainability.

He writes in Status Goods and Sustainability:

The test of my hypothesis is that if the supply of such consumer goods falters, then economic growth will also falter. The so-called developed nation-states will have to re-adjust in radical ways if their populations are to survive.

There are more than a few signs that developed countries’ economies are now faltering. In order to survive in future years, we will have to revert to more self-sustaining forms of society in which status is intrinsically satisfied and in which production and trading systems do not depend on the incessant supply and consumption of status goods. Before discussing my main case I will briefly review the present situation in the developed nation-states. To read further please click on “Pamphlet in preparation” link below.

So what will this status satisfaction mean for workers.

Keith Hudson in his newsletter.

The conclusion I draw from all this is that if any nation-state (if the concept means anything any longer) wants to know what to do in the coming period then the very best thing it can do is to ensure that every possible child is given the best possible chance in life to fulfil its mental potentialities. Increasingly, a modern society will need as many bright people as possible — and there are far more potentially available than now. Tony Blair got the picture right when he began his first term of office and said that his priorities were “Education, education, education”.  Unfortunately, he was waylaid by too many other diversions during his ten years.

Perhaps another political elite will cotton onto this in the coming years. If they do, they’ll have the help of some of the very brightest young people who are now engaged in the two growth areas of science — genetics and brain science. President Obama has shown some glimmerings of appreciation, and certainly the Chinese are deeply aware of this, but most politicians and civil services are still stuck in wanting to continue the fallacy of our time — GDP-growth as the answer for everything (particularly their own jobs and pensions via taxation).

The more I read this, the more I link this to a steady-state economy idea.

Economic growth is an increase in the production and consumption of goods and services. For distinct economic or political units, economic growth is generally indicated by increasing gross domestic product (GDP). Economic growth entails increasing population times per capita consumption, higher throughput of materials and energy, and a growing ecological footprint. Economic growth is distinguished from “economic development,” which refers to qualitative change independent of quantitative growth. For example, economic development may refer to the attainment of a more equitable distribution of wealth, or a sectoral readjustment reflecting the evolution of consumer preference or newer technology.

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Within a given technological framework these constant stocks will yield constant flows of goods and services. Technological progress may yield a more efficient “digestion” of throughput, resulting in the production of more (or more highly valued) goods and services. However, as emphasized in biophysical economics (which may arguably be classified as a subset of ecological economics), there are limits to productive efficiency imposed by the laws of thermodynamics and therefore limits to the amount and value of goods and services that may be produced in a given ecosystem. In other words, there is a maximum size at which a steady state economy may exist. Conflicts with ecological integrity and environmental protection occur long before a steady state economy is maximized.

One major factor in terms of physical limitation is energy or to be more specific; cheap energy.

The graph below suggests the same visually.

This is more interesting – The Olduvai Theory of Industrial Civilization.

I do not think that is going to happen to us.  Atanu Dey explains:

The advanced industrialized economies were lucky to have had their development fuelled by cheap fossil energy. Today’s developing economies have a much tougher challenge. It was a very short window of opportunity which opened just about 150 years ago and is likely to close in the next 40 years, by when the known reserves will be depleted at current levels of consumption.

All told, 200 years is a very brief interlude considering thousands of years of human civilization and hopefully hundreds of thousands of years yet to come. At some time in the distant future, they will look back and remark that the age of fossil fuel was a short inflection point, a point at which humanity passed through the bottleneck of dependency on oil from the ground. Before that point, humanity’s primary source of energy was the sun, and so it will be after that point.

The Sun will come to the rescue. However, there are other limits apart from energy.

The Ecological Economics view comes from a case of physics and the limitations to produce growth. Keith comes from a view of status goods as the driver of growth.

In either case, the developed o industrialised economies of the world face the future of a no-growth economy. One economy which has done with not much GDP growth for many years is Japan.  What has been their experience and can their experience teach us something?