The Limits of Efficiency

A few months ago I wrote about the myth of decoupling – how you cannot separate economic growth from environmental impact. I touched on a topic in that post that is critical to the argument against continued economic growth: the limits of efficiency and the physical constraints of thermodynamics on the economy. That post received a lot of good feedback, as well as a few requests to talk about efficiency limits in more detail.

Neoclassical Arguments Defy Natural Laws

Gravity is a basic law of our existence. To hear someone claim that gravity is a myth would be astounding. A large group of people believing such a claim would be even more ridiculous (sounds like climate change deniers, actually). Yet, anyone trumpeting infinite economic growth does just that: makes a claim that violates basic laws of nature.

You might be asking yourself how I can make such an accusation when we are obviously still growing as an economy. Well, sure we are, but this is actually uneconomic growth, false growth, and debt-driven growth. All that debt is expanding while our natural resources do not – which spells C-O-L-L-A-P-S-E, if you’re curious.

The most common argument for economic growth continuing indefinitely without undermining the environment is “technological progress.” This really means technological efficiency, or our ability to do more with less and less. Neoclassical economists, policy makers, politicians, and even the average citizen today all believe technology will save us in the end. The thought is that we’ll move to an “information economy” or to a “space economy” and produce growth by using less resources.

The basic claim is we will continue to make leaps in technological progress that will maintain economic growth at the same level of ecological impact (resource use, waste, etc). We can make more today with less material per unit and less energy per unit than we could two decades ago. However, as a pointed out in my earlier post, this relative decoupling is weak in comparison to the growth of the economy as a whole. That is besides the point. The matter at hand is efficiency.

We can get better and better at production only to a certain point. Efficiency cannot improve infinitely, therefore the economy cannot rely on it for infinite growth. Period.

Physical Laws of the Universe

The scientific community is always challenging itself. This is the very purpose of research and institution of the scientific method. When someone develops a theory it is challenged by experiments designed to support or disprove that theory. Some of these lucky ideas will be supported with such strength that they are no longer considered theories, but laws.

Laws of nature are the building blocks of scientific advancement. Future theories are based on current laws. We all (should) know the laws of gravity, of basic physics, of thermodynamics, et cetera. The last is a set of laws that govern the exchange of energy, expansion of entropy, limits of efficiency and rules regarding temperature.

Before I go forward I really want to drive home a point here: these are physical laws of the universe that cannot be altered or subverted. There is no way around physical laws and any hope for a scientific break through in that department is not a credible vision of the future (aka it’s pure fiction).

The Ultimate Crux To Growth: Thermodynamics

The laws of thermodynamics are very clear: everything wears out (creates entropy) and there cannot be a system that reaches (or exceeds) 100% efficiency. Herman Daly makes a note of this in his revolutionary book Steady State Economics, by pointing out it is important “to recognize that the entropy law is the basic physical coordinate of scarcity. Were it not for the entropy law, nothing would ever wear out; we could burn the same gallon of gasoline over and over, and our economic system could be closed with respect to the rest of the natural world.”

Not only does this sound impossible when common sense is applied, but we know it to be against the laws of the physical universe. Yet, we continue to clamor for economic growth. We cannot grow forever on a finite planet. There are not enough resources. Our technology has limits, most of which, I would argue, we have met – at least in terms of being able to have any large expansion of production, consumption, and waste absorption (the economy) on our tiny planet. We’re pushing forward on debt, running out of our savings (natural capital), and heading towards collapse.

Because we cannot improve our efficiency to combat the environmental degradation caused by economic growth (in fact, we cannot even come close, according to history), we are left with the same fact that economic growth cannot continue. It no longer matters if it is an “information economy,” which still relies on real-world, consuming people and technologies; or if it is a “space economy” that will rely on resources to get us off the surface of the planet and build ships. Everything has a limit, including economic growth. We’ve hit that limit on growth in the developed world. Now we need to think about our post growth society.

7 thoughts on “The Limits of Efficiency”

  1. UK’s Guardian just recently wrote an article that talks about the steady state economy entitled “Beyond growth: why we need a world without economic growth.” In it the author touches on Tim Jackson’s work and mentions this very argument:

  2. Great post! I’ve been waiting for someone to distill this argument into a short piece for awhile. I think this detail — limits to efficiency — is what separates the Postgrowth movement from mainstream “green.” Green tech that allows us to be more efficient with limited resources is great, but far from the real deal: limits to growth!


  3. Very well put Joshua. A couple of considerations I wanted to share with you:
    – efficiency: I once heard a superb metaphor from a professor visiting BTH university. “An overloaded ship where materials are allocated efficiently will still sink, but perhaps efficiently”
    – On natural limits: couldn’t agree more! There is one thing I would just add to your point, which is the quality of some of the things we make (ie, beyond mere quantities). There are cases where is more of a matter of phasing out some particular compounds (eg. toxic compounds hard to break down in nature) where even small quantities are extremely poisonous for the ecosystems and human bodies. A good account of the Planetary Boundaries is done by the Stockholm Resilience Center.

    All the best, congratulations for the extremely relevant blog.

    1. Marco,

      Thanks for the comment and kind words! Glad you liked the post and the blog.

      Very good points you make, I couldn’t agree more. I really like the Planetary Boundary concept, seen some very cool infographics from it.


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