The Growth Monster is slaying itself -

The Growth Monster is slaying itself

In the first of a three-part series, author Paul Gilding examines the end of economic growth. Once dismissed as the fantasy of fringe economic thinkers, the combination of climate change and associated economic risks, peak oil, and rising food prices has caused the penny to drop – growth may not go on forever. Will politicians, economists, and business leaders be able to cope?


Part 1 of a 3-part series

As you look around at what is now 5 years of temporary financial crises and market uncertainty, then consider the Occupy movement and rising concern about systemic inequality and Jeremy Grantham’s views on the end of cheap resources, what do you think? When you add in climate change and associated economic risks, then peak oil, then high and rising food prices, are you getting nervous yet? Is this just one more period of a “bad few years”, or is there something more profound going on?

If your answer is the latter, that perhaps we have a system problem, then you’re not alone. As if out of nowhere, the long acceptance that economic growth is always good and would go on forever, is slowly but surely breaking down. For a long time one couldn’t even raise this idea without being ridiculed. Environmentalists like myself had to always couch it as “growth is not bad, it just needs to be green growth”. Political leaders who didn’t support and deliver growth were no longer political leaders, because it was  accepted that delivering economic “prosperity” (i.e. more growth), was essential to political success and survival.

Now we are facing reality. Whatever one’s political philosophy or view on how things should be, the facts are pushing philosophy out of the way. The issue is no longer if growth is good or bad, it’s that growth is coming to an end. The global growth economy is – messily and inconsistently – grinding to a halt. This is not a few bad years, this is game over for the economic philosophy that has guided human progress for hundreds of years.

It will still take some time given the mighty political, economic and cultural momentum behind it, as well as the power of our denial, but the signs are clear that both the actual end of growth and the breaking down of denial has begun.

Let me repeat, I’m not talking here about the long philosophical debate on the relative merits of growth – the argument that, for rich countries, getting richer no longer improves our average quality of life. What we face now is not a political choice – it’s too late for that. We have put in place the processes that will force the end of growth and nothing can now be done to change course.

Denial will still be the dominant response for some time. A recent UN report on this topic, led by 22 global political leaders, raised an urgent call for greener growth, pointing out the core risks to progress in our current approach. They don’t yet accept that infinite growth is not possible, but they at least understand that continuing our current approach isn’t possible either.

What they and others are realising is that economic growth that increases GDP at the expense of our natural capital, is actually what Herman Daly calls “uneconomic growth”. It’s what draws Joe Romm from Climate Progress to say the global economy is a giant Ponzi Scheme. Adding in the issue of crushing debt, Richard Heinberg’s excellent new book “The End of Growth” has joined in calling time on the growth model.

What they all know is that we basically only have growth now because we’re taking it from the future, which makes it not actually growth at all – just debt driven consumption. And we know from recent experience where that leads us…….

Next week in this 3-part series we will consider China as an accelerated example of the upside and downsides of growth. We welcome and encourage your comments and input.


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  1. Dermot Duncan 9 years ago

    A very interesting topic worthy of serious consideration and one which I have been considering on an investment front recently, with two recent equity investments in companies: both energy/green related. My view at present, still forming, is that we are moving from a “consumption” to “investment” based economy (of course there will still be “consumption” – but, a more sophisticated understanding of frugality and not spending on non-core items) where we use much of the current investment infrastructure (i.e. debt/capital markets etc) to develop the “new economy” (i.e. delivering the tools to assist those technologies/companies that are deliverying the solutions) rather then those “old economy” choices. One issue for Australia to consider is how Dubai is exposed to high domestic gas prices is now moving dramatically to renewables – gas is not their interim fuel of choice – but Australian investors are rushing to gas!

  2. Reece 9 years ago

    Great article and I look forward to the next 2 parts.

    I also look forward to the first mainstream politician to confront the incredibly logical conclusion that infinite growth on a finite planet is just not possible. Be that growth of resource extraction, commodities trading, consumption or investment.

    But growth is such an integral part of our whole economy and society that as Gilding says, even environmentalists have veered away from it.

    Keep up the great work in communicating this fairly logical conundrum Paul Gilding – I hope it becomes a topic this website continues to examine.

  3. Rick 9 years ago


    Good summary of some important aspects of your book (which I am reading currently). My two questions are:
    1. Is anyone listening to you, and in particular any of our current crop of leaders in Australia and internationally?
    2. Has any talented economist (or otherwise) come up with a model for successful businesses based on stable or even shrinking markets? Does the game just become more ‘dog eat dog’ with better firms chewing up the less successful ones? Are there unhappy companies where people get made redundant regularly because of shrinking markets? Or are there some more positive models?

  4. Jim 9 years ago

    The no growth camp has to begin to separate resource extraction and depletion from other types of growth. Growth of some kind is needed to absorb the growing global population into the economy, and so pull them out of poverty. But this does not necessitate ever increasing resource extraction. Building a solar power plant drives growth, as do social and community services, community farming, environmental regeneration, reforestation. Even ending deforestation can be constructed as a job-generating economic activity.

    The trick is to remove growth – whether positive or zero – as an ambition of policy. Instead, policy should target real, concrete goals – zero unemployment, zero poverty, full environmental sustainability – and let growth be the byproduct of whatever it takes to achieve those goals.

    • Rick 9 years ago

      Jim, thanks for that. Interesting comment that “Growth of some kind is needed to absorb the growing global population into the economy, and so pull them out of poverty.” Does that put you in the growth can be decoupled from emissions camp? Otherwise growth (according to Paul’s book), even to eliminate poverty, will still cause the planet to crash into limits and then we will all be worse off (the poor especially so). This is covered well in the book.

      I am just up to the part in the book that deals with redistribution of wealth, a VERY sensitive issue, but it appears one that Paul argues must be tackled in order to limit dangerous climate change AND eliminate poverty. I look forward to seeing how Paul proposes we tackle this one!

    • Paul Gilding 9 years ago

      Jim and others
      I think we need to separate the theoretical possibility of a non materially based growth model (i.e. money itself doesn’t cause damage) from the reality we are now in. The growth model the world is pursuing, inc India, China etc, is materially very intense and that means in my view, the economic system will crash due to constraint and overload, before we get the chance to move to an alternative model. As Yassir and Sue point out above, there is much discussion of other models but when and how we get there is the thing to consider.

  5. Alistair 9 years ago

    I recently read Diane Coyle’s “The Economics of Enough” hoping to find out how you run a viable, sustainable economy on a finite planet. She still emphasises growth, but growth based on services. The book left me feeling like I’d ordered a three course meal and only got the appetiser, so I await with interest Paul’s remaining instalments.

  6. JIm 9 years ago

    I’m intrigued by the population driven ponzi scheme conception of the resource constraint (economics) problem. Perhaps Japan is a case to review and consider.

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