Aside from tiny Bhutan and their pursuit of Gross National Happiness, every country bases economic policy on the pursuit of endless GDP growth, and companies are right there with them. But common sense tells us that nothing can grow forever, and thus national and corporate-level goals alike have a sizeable blind spot.
This recent humorous Platonic dialogue between a physicist and economist, as told by the physicist Tom Murphy, reveals the absurdity of expecting steady growth in energy use (or economic growth) indefinitely.
To be fair, it's not like economics is the only discipline with magical assumptions -- high school physics is filled with Newtonian models of frictionless environments. But teachers are describing theoretical "laws" to further our understanding of the universe, not perfectly predicting everyday experience, or basing policy on the perfect scenario.
Physics accepts that there are limits. If you push something on a frictionless surface, it will accelerate in proportion to mass and force, no more, no less. There is no perpetual motion machine. In mathematical terms, these models have asymptotes that can never quite be reached. But in the economics, business, and political realms, very few seem to admit that there's an upper limit on the growth of an economy or resource use.
So in Murphy's mock debate, the physicist wins -- not because he's a better debater, but because, in the end, math and physics trump all by exposing the fallacy of that kind of perpetual motion. Here are some fun stats that Murphy uses to make his point:
Apparently, for a few hundred years, the total energy demand of humanity has risen steadily at about 3 percent per year. We've gotten more and more out of that energy, with quality of life for increasing numbers of people rising even faster. But even if you assume energy use will grow at a slower 2.3% indefinitely, Murphy says (and I ran the calculations as well), we start to hit some silly quantities over the coming centuries. In 1400 years, we would be consuming all of the energy that the sun produces (in just 400 years, it would be all of the solar energy hitting the earth).
You might say that the world 1400 years from today doesn't matter much now. But consider this fascinating article in Time by Fareed Zakaria about a totally unrelated topic, the struggle of many countries in the Arab world to embrace democracy. A new study proposes a theory: it was the Arab conquering of these lands in the early 600s (yes, 1400 years ago) that led to their challenges today. So what we're doing now can have real impact on real people living 1400 years in the future, even if it seems remote.
Of course we have much more pressing problems today than what the world could look like 1400 years from now, but the point is the same -- what we do today matters to the future. And expecting compound growth will get us into trouble long before another millennium, or even another century, is out. In the shorter timeframe, the real pressing problem is not just total energy use, but where that energy comes from. Too much carbon in the atmosphere is the pressing problem.
If we stop using the dead-plant, fossil-based forms of energy, and move fast to renewable energy, we can provide all our possible power needs for many centuries and avoid the problems of compounding carbon in the atmosphere. We can also decouple the growth of quality of life (basic needs, plus rising fulfillment and joy) from the growth of energy, possibly allowing us to set rising economic targets for much longer before we hit a physical wall (we'd still need to deal with other limits like water).
Then we can move on to worrying about where we'll get another sun to power our needs in the year 3412.
(This post first appeared at Harvard Business Online.)