Energy, GDP, and Thomas Malthus

For as long as most of us can recall, there has been a debate over the limits to economic growth. It has been one of the more consistent threads in the whole fabric of speculation over the future of the world, first propounded by the Rev. Thomas Robert Malthus in the 18th century and periodically resurrected in the centuries since.

Malthus posited that mankind’s upward progress toward prosperity was imperiled by an inevitable collision between population and agriculture. Population increases geometrically while food crops can increase only arithmetically. Ergo, Malthus figured, population growth would crash amid famine; pestilence, death, and destruction would reign. He was, of course, wrong.

Neo-Malthusians have taken up their mentor’s cudgel many times since then, from Paul Ehrlich, to the Club of Rome, to peak oil prognosticators. The purveyors of doom are always wrong, but never admit it. Like the millenialists and Millerites of the mid-19th century, the neo-Malthusians, facing incontrovertible evidence of their error, retreat to recalculate and reformulate. An article in the British journal Nature, which we describe in this issue of MANAGING POWER, resurfaces the limits-to-growth chestnut, this time with regard to coal.

Limits-to-growth arguments have long informed energy debates. When I began writing about energy’s big picture issues in the mid-1970s, there was a raging dispute about the necessity for hundreds of new nuclear plants to power the growing U.S. economy. Electricity, the argument went, was the driving force for our growth (true enough, in its way); there is an iron-clad one-to-one relationship between growth in gross domestic product and growth in demand for electricity (not true); only new nukes could supply that electricity (a gross misstatement). Hence, facing a politically induced oil shortage, the Nixon administration promoted "Project Independence" and its failed policy agenda of building 1,000 new baseload nuclear plants well before the turn of the century.

This was, as the British are wont to say, bonkers, barking, round-the-bend stuff. The U.S. is now into the second decade of the 21st century, stronger, wealthier, and more dominant in the world than in Henry Kissinger’s wildest 1970s dreams. We failed to achieve much beyond 10% of the goal for nukes, nor did we run out of oil or other energy resources, M. King Hubbert notwithstanding.

What went wrong? Here are just a couple of items. First, probably most important, the shade tree economists who predicted resource shortages failed to factor in both technological change and elasticities of demand (both price driven). I well recall the pompous pundits of the time insisting that price will have no effect on demand. Well, it does. Remember the 100-quad economy, coming our way by 1985?

Second, the analysis of the time somehow failed to grasp that cars in the 1970s and 1980s didn’t use electricity. When the Arab oil embargo lined us up in our Chevys, Fords, and Chryslers waiting to buy price-controlled gasoline, the Nixon and Ford administration responded with, "Let a thousand nukes bloom." When the fall of the Shah of Iran tripled still-controlled gasoline prices in 1979, the Carter administration responded with its feckless plan to back out oil from electric generating plants. This policy prescription came despite the fact that there just wasn’t much oil used to generate electricity (and that was mostly residual oil, a low-cost by-product of gasoline refining).

Why do I raise these hoary recollections? In addition to the interesting Nature article of the alleged coming peak in world coal production, an interesting backflip of neo-Malthusian doctrine has just appeared in the journal Bioscience. That article, "Energetic Limits to Economic Growth," was written by a team led by the University of New Mexico’s James H. Brown. Brown et al. (with funding from the International Energy Agency and the World Resources Institute) raise the old observation, most likely true but of limited utility, that there is a "positive relationship between energy use and economic growth." Energy, they say, plays a "central role" in economic growth, though they don’t define just how that works.

As disciples of the claimed science of "ecology," Brown and his colleagues offer up a labored analogy likening economic growth to biological metabolism. The linear relationship between growth and per capita energy use, on a logarithmic plot, they note, has an exponential value of 0.76, "close to three quarters, which is the canonical value of the exponent for the scaling of metabolic rate with body mass in animals." Queue the Twilight Zone music.

Maybe this is coincidence? "We disagree," assert Brown et al. End of discussion, no further arguments brooked: "We infer that energy limits economic activity through direct causal mechanisms." Maybe others infer that it doesn’t.

The article correctly asks: "Does energy use support economic development or does economic development drive energy consumption?" But the article provides nothing to help resolve this chicken-and-egg conundrum. The answer, Brown and his cohort suggest, is this head-scratching howler: "Just as a body has a metabolism that burns food energy to survive and grow, a city or national economy has a metabolism that must burn fuel in order to sustain itself and grow." No wonder logicians warn about the dangers of arguments by analogy.

The conclusion of the article is hardly a surprise: "The bottom line is that an enormous increase in energy supply will be required to meet the demands of projected population growth and lift the developing world out of poverty without jeopardizing current standards of living in the most developed countries." That raises the specter that "energy shortages might trigger massive socioeconomic disruption." The future awaits—the same future that befell "Mohenjop Daro, Mesopotamia, Egypt, Rome, the Maya, Angkor, Easter Island. . . ." We’re doomed.

The Bioscience article, which claims to synthesize economics and ecology, provides what my sainted mining engineer father once described as "going from an unwarranted assumption to a foregone conclusion."

—Kennedy Maize is MANAGING POWER’s executive editor.

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