Rethinking Economic Growth Theory From a Biophysical Perspective by Blair Fix

Author:Blair Fix
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Reviewing the empirical evidence presented in this chapter, it is easy to see why policymakers and economists focused on growth and not on distribution. It is because growth eased distributional issues. Summarizing our findings, we can state that increases in the useful work growth rate are related to:1.Increases in profit’s share of national income.

2.The increased ability of debtors (both public and private) to repay creditors.

3.Decreases in income inequality.

At the turn of the twenty-first century, distributional issues are once again of central interest to economists and policymakers alike. For instance, Thomas Piketty’s (2014) book on income inequality has become an unlikely New York Times best seller. The evidence presented in this chapter suggests that distribution and growth are inherently connected—distributional issues are magnified when biophysical growth stagnates. Biophysical scholars have long predicted that peak oil would spell the end of growth (Hubbert 1993; Heinberg 2011; Murphy and Hall 2011). With global oil production currently in a plateau, we should not be surprised that distributional issues are once again at the forefront of public interest.

As stated at the outset of the book, complexity poses a major problem for science. Without a certain amount of idealization, science is impossible. Simplify too far, however, the scientific theory will be of little use. Removing the real-world complexities of economic distribution greatly simplifies the process of explaining growth. Yet, the evidence suggests that this simplification is misguided: the complex business of distribution seems to be inherently connected to biophysical growth. As such, the neoclassical assumption that distribution is unrelated to growth is insidiously untrue.

From a Darwinian perspective, the control of resources is one of the major drivers of reproductive success. Although we should not reduce this to social Darwinism, it is naive to think that humans are somehow separate from an otherwise universal resource struggle. From the evidence presented here, it is clear that the growth of energy consumption dampens the distributive struggle. After all, the easiest way to reduce the competition for resources is to increase the resource “pie”. This effectively makes the game “positive sum”: there are relative winners and losers, but overall, everyone wins. Yet the peak and decline of energy production threatens to make the game “negative sum”: there will be relative winners and losers, but overall, everyone loses. Thus, while predictions are difficult to make, a future decline in energy consumption will almost certainly exacerbate existing distributional problems.

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