Tom Murphy, who is a physics professor at UC San Diego, runs a blog called Do the Math. Just over 10 years ago, he had a popular blog post asking can economic growth can last?, which I discussed in one of my a blog posts. A couple of days ago, he published his main arguments in a Nature Physics comment titled Limits to Growth, the full text of which you can also access here.
He makes two main arguments. One relates to waste heat, and the other to physical resource limits. When we utilise energy on the Earth’s surface it eventually turns into waste heat that needs to be radiated into space. At the moment this is negligible. However, if energy usage grows at 2.3% per year, it will increase by an order of magnitude every century and this waste heat would become significant within a few centuries. His argument isn’t that this is likely to happen. It is simply an illustration of a real limit. Admittedly, as pointed out on Twitter, he also doesn’t really make clear that this only applies to non-renewable sources of energy, but there are also limits to how much renewable energy we could use.
His other argument relates to physical resources. There must be some limit to our use of physical resources. This doesn’t necessarily limit economic growth because not all economic activity relies on the usage of physical resources. You could imagine a scenario where we reach a stage where economic growth decouples from the use of physical resources. In other words, we reach the limit of physical resources, the usage of which is now fixed, but economic growth continues through activities that don’t utilise these resources.
The problem that Tom Murphy highlights is that this means that economic activity associated with these physical resources will become an ever decreasing fraction of total economic activity. However, these would be activities that are crucial to our survival, such as food and energy. He suggests that this would be ludicrous. For example, if they become effectively free, how do you stop someone from buying it all and raising the price?
What I would be very interested to hear are mainstream rebuttals to the above argument. It could be that mainstream economics just doesn’t consider century long timescales. If so, does that imply that Tom Murphy’s arguments have validity over these longer timescales? Another could be, as the paper suggests, that the finite physical resources will always be associated with a non-negligible fraction of total economic activity. Hence, they essentially act to limit how much overall economic growth is possible. Alternatively, maybe there are ways to have continued economic growth even if those sectors associated with physical resources become a vanishingly small part of the global economy.
Alternatively, if no mainstream economics are willing to discuss the arguments in Tom Murphy’s paper, maybe my commenters can let me know what they think 🙂