This interesting and well remarked Scientific American article ‘The Delusion of Infinite Economic Growth‘ reminds us that there are physical limits to growth, whatever more “sustainable” technologies are implemented. Any technology that scales find its physical limits.
“Every stage of the life cycle of any manufactured product exacts environmental costs: habitat destruction, biodiversity loss and pollution (including carbon emissions) from extraction of raw materials, manufacturing / construction, through to disposal. Thus, it is the increasing global material footprint that is fundamentally the reason for the twin climate and ecological crises.”
While “Technological innovation and efficiency improvements are often cited as pathways to decouple growth in material use from economic growth. While technology undoubtedly has a crucial role to play in the transition to a sustainable world, it is constrained by fundamental physical principles and pragmatic economic considerations.”
In addition, economic growth is exponential and not linear: “unfortunately, the situation is even more dire. Economic growth is required to be exponential; that is, the size of the economy must double in a fixed period.” Thus, “the inescapable inference is that it is essentially impossible to decouple material use from economic growth.” As a result, more is required today than to develop ‘sustainable’ solutions: solutions to the future raw material crises also need to be investigated.
Even sustainable growth will find its limits – as the economy and technologies scale, they require increasingly raw material and space, often in an exponential manner. But the world is finite, therefore a change of paradigm may be required.
This interesting infographics ‘the richest people in history‘ reminds us that throughout most of our human history, the Agricultural Age, the richest people have been the kings, emperors and rulers of vast areas of land. Then, in the 15th century onwards (the start of the Industrial Age) came the time of bankers and merchants.
The infographic does not go as far, but of course from the 15th century, accelerating into the 19th century, the richest people started to be industrialists and bankers financing new machines and infrastructures. And now, they are industrialists of the economy. Still their wealth is much less than the historical rulers mentioned in the infographic whose wealth could be up to 20% of world GDP – which shows that in a certain measure richer people are now much less proportionally rich than historical figures.
The other interesting transformation to note is that up to the 15th century, wealth was derived regionally and mostly within one’s borders. Then trade spread and fortunes were made on this basis. In the 20th century it started to become truly global, and now it is definitely mostly global for the richest people on earth. Thus the geographical basis of wealth has also significantly changed.
It is often interesting to take such as historical perspective to remind ourselves that what we observe today is the result of a long evolution. Wealth is now not an exclusive property of tyrannical rulers, or industrialists but the domain of businesspeople with global interests that move resolutely into the Collaborative Age.
The site ourworldindata.org is always an excellent reference about worldwide statistics, and their page on economic growth is particularly instructive. The historical perspective is quite instructive.
Global economic wealth production is quite exponential when looked upon a long time frame, since the Agricultural Age through the Industrial Age. Lately, it has spread to many more countries and people, sustaining this exponential growth.
GDP per capita follows the same exponential growth, particularly in developed countries, but also – albeit at a lesser level – in developing countries.
As the page shows, conversely, extreme poverty has been decreasing significantly in the recent decades globally, which is excellent news (even more taking into account the significant growth in world population) – going down from a historical 75% of world population down to less than 10%.
Hence economic growth is definitely a major component of human well-being. Solutions to the current climate crisis should take it into account, looking at means to pursue growth – in a more sustainable manner – so as to continue raising the well-being of more people.
In today’s collaborative economy, there is a real question in certain service industries of the interest of building corporations instead of just relying on a network of freelancers. This post by Valeria Maltoni ‘Why Build a Company‘ sheds some light on this important question: in fact, only established companies can act in a longer timescale, and this remains a social requirement.
Corporations are of course needed when substantial capital investment is required like in the heavy or light industry of the Industrial Age; but in the services economy where capital investment is minimal, the question remains open and controversial. I know quite a number of organisations that rely mainly on animating freelancers to deliver services. On the other hand, I have build my own service companies as being mainly companies with partners and employees, and if we do use freelancers, it is only sparingly to complement rare competencies.
Valeria Maltoni makes an excellent point about timeframes. “The destiny of our species depends on our ability to survive on different time scales.” And companies have a different scale (years) compared to freelancers (days, months). Their project is to developing something over years and even sometimes generations.
She quotes “Corporations are entities that can transform and dissipate socially useful energy throughout society“. “Building a company is creating the vessel to hold value“, and this value can have many dimensions beyond the financial. In building my companies I certainly take a longer time view to deliver some kind of long standing value to the world.
Even in the Collaborative Age, the core of corporations to develop and keep value on the longer term will remain required. There may be more freelancers and people flowing from project to project, but some longer-term value receptacles must remain.
This series of posts is incredibly instructive and starts with electronic jamming devices developed during World War 2 to jam German anti-aircraft radar during bombing raids over occupied Europe. Subsequently with the Cold War, many efforts were made in programs financed by the military to continue to develop advanced electronic warfare devices. One particular challenge was to be able to get bombers in the Soviet Union for a first nuclear strike, overcoming the extensive radar and electronic defense coverage.
Beyond the extremely interesting accounts for this period, we find that most of the initial Silicon Valley innovation ecosystem was centered around Stanford and defense efforts in the electronic warfare field. Arpanet, the origin of internet, is of course another defense programme designed to sustain communications even in case of nuclear damage. Therefore the Silicon Valley is the child of a large government, defense related program. It is the consequence of another breakthrough of WW2 and, industrial-age like, is a centrally financed effort.
Therefore, if you seek to emulate the Silicon valley today (like half of the governments would dream to), that may be a bit hard, because the roots of this unique ecosystem go back a long time, to a heavily funded, continuous effort from WW2 to the Cold War over five decades.
As reminded in this excellent post by Gapingvoid, the notion of country is quite recent (the formalization of the concept of nation dating back to the Peace of Westphalia (1648)). It is now under siege, and actions are being taken in real life that show its limits: “The Kingdom of Denmark has just appointed a new Ambassador… not to a country, but to Silicon Valley“.
There is thus an increased recognition that large corporations of the Collaborative Age may have a larger influence on our lives than smaller countries. At the same time the notion of nationalism shows its limits in an open, more connected world (even if there is a temporary reaction against international trade, it remains and will remain a major economic factor).
There is at the same time a pull-back towards one own’s community (smaller entity than the nation-state) and the feeling of belonging to a wider, more international community through our social networks and through supra-state entities such as the European Union. Power is hoarded by large global corporations. At the same time, the emergence of a nomadic elite is substantially changing the perspective of the society influencers towards a more global perspective. The central level of nation-state is progressively being voided, or at least becomes less important.
The nation-state was probably a temporary useful concept suitable to the Industrial Age. It is probably not adapted to the Collaborative Age and new governance levels will have to be implemented – probably a multi-layered governance with a much stronger global level.
This excellent post by Quartz ‘We’re thinking about the fourth industrial revolution all wrong‘ gives some perspective on terminology. It compares what is now generally understood as the “Fourth Industrial Revolution” (1st: steam engine; 2nd: oil & electricity; 3rd: internet; 4rd: digital) and what we name here in this blog the Fourth Revolution (1st: language; 2nd: writing; 3rd: broadcasting (printing etc); 4th: cheap 2-way communication).
I like very much this article of course because it exposes that we should not be myopic and that the real change is akin to what we expose in this blog since the beginning. What is usually meant by the “Fourth Industrial Revolution” is in fact just a way to name a trend into the digital, but the real change is really very cheap, global, 2-way communication. In this article, it is mentioned as “the period of industrialized intelligence, rising with the mental-energy-saving inventions of the mid-20th century and continuing through today. Much as the industrial revolution dehumanized biological strength with machines, the displacement of biological intelligence with computers represents the dehumanization of intellectual labour. Projecting current techniques a few years forward suggests that autonomous systems will eventually be capable of outcompeting humans in every area where intelligence is the key component of production.”
To avoid falling in the trap of overestimating the importance of present trends, it is always worth taking a deep historical perspective. In any case, the current transformation is really a revolution, and probably much deeper than the concept of “Fourth Industrial Revolution” would imply: we are now beyond the Industrial Age!
The Antikythera mechanism is an absolutely high-technology astronomical system that was discovered onboard a greek shipwreck. Dated between 100 and 200BC it was a millenium in advance compared to the usual scale of technology development.
The sophistication of the device has led some to claim it is a hoax. On the other hand it is reasonably possible that the secret of this science got lost when the Romans dominated Greece. At the end of the day only those who win write history.
Beyond the marvelous story of this device, its discovery and the discovery of its function, this gives to think about the fact that it is always possible to regress as a society and forget about great discoveries, plunging the world a millenium back.
Of course it might be less probable nowadays because of the multiple copies of our knowledge (compared to the unique scrolls of the Alexandrian Library), but this event demonstrates the possibility of such occurrence. We always need to be wary that it might occur again.
In particular he explains how since the 1970s and the book Limits to Growth “scientists, sf writers, economists and environmental activists have wrestled with the question of abundance — how the “green left” transformed left wing politics from the promise of every peasant living like a lord to the promise of every lord living like a peasant.”
The assumption of scarcity which stems from this approach (itself closely related to the limits of our Mother Earth so visible from photos of the space missions from 1960s) coupled with the assumption that well being was necessarily related to a significant usage of natural resources led to the development of a strong culpability feeling for all of us – and the feeling that we could only expect a decrease in our comfort level.
This scarcity assumption is still the premise of many comments on environmental issues. It is an issue in some instances but overall, we seem to have increasingly decorrelated energy consumption from growth. Would it not be possible that in the Collaborative Age we manage to have abundance within the capability of Mother Earth?
The point here is that some of the 1970s assumptions that govern the way we manage environmental politics might need to be revisited in the light of recent technological developments.
The interesting part of the article is the reference to a study that would show that these limitations of our reason could be linked back to the context of the hunter-gatherer. The need for collaboration, fostered by evolution, may have blunted some aspects of our reasoning. That would be in particular the case for confirmation bias (the tendency to find confirmation that confirms our opinions).
There is hope still: “Humans aren’t randomly credulous. Presented with someone else’s argument, we’re quite adept at spotting the weaknesses. Almost invariably, the positions we’re blind about are our own.” The trick is to be able to get others look at our situations. And, maybe, try to get over those limitations we have inherited from our ancestors.
To those that still believe that somewhere on Earth there is something called pristine nature, untouched by man: this article and the scientific studies it is based upon demonstrate without doubt that even the deepest, (apparently) wildest Amazon rain-forest has been deeply transformed by Humans in the last 8,000 years – since humans reached the Americas.
“the human fingerprint can even be seen across one of the most biodiverse yet unexplored regions in the world, the Amazon rainforest.” Humans selected the most useful plants and made them reproduce with advantages, and slew some of the key animals. New tree types appeared through selection to produce larger useful fruits.
This is another proof that there is no place on Earth that has not been already shaped in one way or the other by humans. Pristine nature does not exist. We need to accept that our environment has already been engineered – for the best and for the worst. The issue is how to influence this complex environment in the direction we would need it to become.
I am fond of historical comparisons and parallels and this recommended article is a very interesting analysis. One important and interesting quote: “By the estimates of Gregory Clark, economic historian at the University of California at Davis, it took 60 to 70 years of transition, after the onset of industrialization, for English workers to see sustained real wage gains at all.” And Tyler Cowen compares the situation to the actual stagnation of wages since the late 1990s in developed countries.
One element of worry is of course that the Industrial Revolution led to the development of certain ideologies which led to revolutions and political instability and volatility – and much suffering.
Are we watching the same evolution now? This might be an issue to watch closely. I am not as optimistic as Tyler Cowen that this time we should be less extreme and more reasonable: the inclusion of developed countries in the Fourth Revolution will create substantial new sources of instability.