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The Limits to Growth: A Critique

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
December 1972
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Mahbub ul Haq

The basic thesis in the Limits is a simple one—and for that very reason it has a powerful appeal. It derives its conviction from the simple notion that infinite growth is impossible on a finite planet. It lends an air of frightening urgency to this notion by contending that the limits to growth are already being reached and that mankind is destined for catastrophe during the next 100 years unless this growth is stopped right away.

The basic thesis of the Limits to Growth model breaks down into the following major themes:

(1) Many critical variables in our global society—particularly population and industrial production—have been growing at a constant percentage rate so that, by now, the absolute increase each year is extremely large. Such increases will become increasingly unmanageable unless deliberate action is taken to prevent such exponential growth.

(2) However, physical resources—particularly cultivable land and nonrenewable minerals—and the earth’s capacity to “absorb” pollution are finite. Sooner or later the exponential growth in population and industrial production will bump into this physical ceiling and, instead of staying at the ceiling, will then plunge downward with a sudden and uncontrollable decline in both population and industrial capacity.

(3) Since technological progress cannot expand all physical resources indefinitely, it would be better to establish conscious limits on our future growth rather than to let nature establish them for us in catastrophic fashion.

The authors concede that more optimistic alternative assumptions can be built into the model but they contend that this merely postpones the problem by a few decades so that it would be better to err on the side of action now rather than later. They are also conscious of some of the problems that zero growth rates may raise for the world. They hint at policies of income redistribution between the rich and the poor nations as well as within these nations; and they plead for a change in the composition of production away from industrial output and toward the social services. Unfortunately, many of the redeeming qualifications that the authors mention are not pursued by them and are generally lost in their anxiety to make their predictions as dramatic as possible.

“the real issue is how to arrest population growth”

THE BASIC ASSUMPTIONS

Any study of the Limits model clearly must start with a critical examination of the assumptions that went into the model of the world economy on which it is based; it is a truism that a model is just as good as the assumptions built into it. Our investigations showed that many assumptions in the model were not scientifically established and that the use of data was often careless and casual. This was particularly true of the assumptions regarding nonrenewable resources and pollution. We also found that, contrary to the protestations of the authors, the model was fairly sensitive to the choice of these assumptions, and that reasonable adjustments in the assumptions regarding population, nonrenewable resources, and pollution could postpone the predicted catastrophe by another 100 to 200 years even if one accepted the general methodology of the model. And in this context an additional 100 years might be as vital as an additional second might be to a car driver in a traffic emergency—it could transform the whole situation.

Population

The Limits model is right in postulating that world population has been growing exponentially in the last century and that, if the present rate of growth continues, today’s population of 3.6 billion will double in the next 35 years. However, while such medium-term assumptions are fairly sound, the model does not do justice to a number of demographic factors that are likely to come into play in the long run, and which may even be significant in the short run.

To begin with, some of the recent demographic trends indicate that fertility has already started to decline in a number of countries. Of the 66 countries for which accurate data are available, as many as 56 show a decline. Most demographers are agreed by now that the 1970s will see the population growth rate reach a plateau so that by 1980 population growth rates will tend to decline, slowly at first and rapidly thereafter.

Furthermore, one of the major features in the population model of the Limits is that fertility and mortality levels are determined largely by economic factors, such as the level of industrial production and the output of services. Population growth in the Limits model can only be reduced by increasing per capita industrial production. This in turn increases the output of services, including education, which both permits the growth of family planning services and creates the climate for their use to be effective. Little attention is given to the possibility—considered realistic by many demographers—that population growth may be checked by family planning even at low levels of income.

No one will deny that continued population growth at the present rate is a serious matter which should engage the urgent attention of humanity. The question is not whether population growth can continue unchecked forever; it simply cannot. The real issue is how to arrest it through deliberate policies of population planning, and through technological breakthroughs in population control methods suitable for use in the poor nations.

We should not, however, play down the population problem as presented in the Limits model. Even if population control efforts are successful, the world will still be left with a substantial population problem in both absolute numbers and scope for future growth. The long time lags involved in demographic change ensure that population growth would continue for several generations after balance had been achieved between mortality and fertility. Any prognostication about the future, therefore, must take into account the inevitability of a world population several times larger than the present 3.6 billion.

Nonrenewable Resources

A number of assumptions have been made about nonrenewable resources which turn out, on close examination, to be characterized by the same rather dramatic gloom with which Limits views population. The figures on reserves of nonrenewable resources generally come from the U.S. Bureau of Mines, but the bureau warns that 80 per cent of their reserve estimates have a confidence level of less than 65 per cent; Limits ignores this important reservation. Moreover, some of the reserve estimates—particularly for the communist countries—are extremely old or incomplete; some estimates for Mainland China, for example, go back to 1913! Again, reserve estimates have been revised frequently over time and are likely to change again in our own lifetime; between 1954 and 1966, the reserve estimates for one of the largest resources, iron ore, rose by about five times. It is estimated by the bureau of Mines that even these reserves can be doubled at a price 30 to 40 per cent higher than the current price. Similarly, the reserve estimates for copper today are 3.5 times their level in 1935 and it is estimated that they could be more than doubled again if the price were three times higher. The Limits authors allow for such contingencies by assuming that reserves could increase by five times over the next 100 years. This assumption has appeared generous to many who have been alarmed by the sweeping prognostications of Limits but it is in fact extremely—and many experts would say almost irrationally—conservative.

It can, of course, be objected that reliance on such illustrations of how the world’s resource base has expanded shows an unjustified and adventuresome confidence in history. However, this can no more be faulted than the use of history in the Limits study which only looks at the story of irrationality, waste, and neglect.

The pessimism of the assumptions on nonrenewable resources becomes even more evident if one considers that the concept of resources itself is a dynamic one: many things become resources over time. The expansion of the last 100 years could not have been sustained without the new resources of petroleum, aluminum, and atomic energy. What are tomorrow’s possibilities?

’Club of Rome’

A loose-knit group of about 75 men from 25 nations, the “club” includes eminent scientists, industrialists, economists, sociologists, and educators. Despite lack of formal budget or organizational structure, it aims to spur action on major world problems through research projects.

As an immediate example, there exists the imminent potential for exploiting resources on the seabed. Reserves of nodular materials—the most promising underwater source of minerals—distributed over the ocean floor are estimated at levels sufficient to sustain a mining rate of 400 million tons a year for virtually an unlimited period of time. If only 100 million tons of nodules are recovered every year—a target which appears to be within reach in the next 10 to 20 years—it would add to the annual production of copper, nickel, manganese, and cobalt to the extent of roughly one fourth, three times, six times, and twelve times, respectively, compared to the current free world production levels. And the present production cost estimates are a fraction of current prices—for copper, 1/13 for nickel, 1/24 cobalt. These estimates—like all such estimates—are very tentative; but there is a good deal of evidence that exploitation of seabed resources is fast becoming a real possibility.

If certain resources are likely to become scarcer—or, to use the jargon of the economists, if supply inelasticities are likely to develop—it is a scientific and intellectual service to humanity to draw attention to those resources and to the time period over which they may vanish, given current usage and the present state of knowledge. Research into these areas is, therefore, both useful and vital. But it is quite another thing to argue that no amount of research, no technological breakthroughs, will extend the lifetime of these resources indefinitely or to pretend that supply inelasticities will afflict all natural resources in the same manner and at the same time in an aggregate model. While identification of specific supply inelasticities in advance of time is a definite service, sweeping generalizations about complete disappearance of all nonrenewable resources at a particular point of time in the future is mere intellectual fantasy.

It should also be remembered that the waste of natural resources is a function of both their seeming abundance and of public attitudes. It is quite possible—and indeed probable—that with either of the above factors changing, resources can be conserved without undue pain. For the major flaw of today’s pattern of consumption is not really that we consume too many final goods and services, but that we use our resource inputs extremely inefficiently. If certain resources become more scarce and their relative price increases, there will be a powerful incentive for their more efficient use—a factor that Limits completely ignores, as it ignores similarly potent positive factors throughout. For instance, energy can be much more economically used. There is scope for smaller cars with weaker engines, public rather than private transport, increasing efficiency in burning fuels and in generating and distributing electricity, and improved design of aircraft engines and bodies.

Looking at the problem, as Limits to Growth has done, in terms of quantifying the life expectancy of resources as presently constituted, we conclude that these are sufficient to last very much longer than stipulated. It is not a question of expecting natural resources to accommodate forever our current patterns of growth, production, and consumption; clearly, they will not. but we are confident that natural resources will last long enough to allow us time to make deliberate adjustments in the way we use them so that resource needs can be met indefinitely. We have seen no convincing evidence to suggest that mankind faces a final curtain about 100 years from now through depletion of nonrenewable resources.

“about 80-90 per cent of present pollution can be removed at relatively low cost”

Pollution

The assumptions regarding pollution are the weakest part of the model of world economic activity on which Limits is based. In many instances they are not established on any scientific basis. We still know so little about the generation and absorption of pollution, and about the effects of pollution, that definite functions are very hard to establish.

Our examination of the relationships between pollution and economic growth began with a study of the model developed in the book World Dynamics.2 We did this because the Limits model was not available to us at that time. This indirect examination was justified because the Limits model treats pollution in much the same way that World Dynamics does. The main differences are that Limits allows for a time lag between the generation of pollution and its effects and also for pollution resulting from agricultural development. However, these differences are hardly important for the main argument of the Limits model.

Although little is known about the generation of pollution, it is simply claimed in the World Dynamics model that it rises at the same speed as the growth in capital stock per capita. As natural resources are used, progressively more capital must be applied to extract a given amount of final output—because of the necessity of using increasing amounts of energy in production as resources are either consumed or disposed of. Hence pollution grows to increasingly higher levels. In fact, the prediction of a pollution catastrophe depends on the value of the ratio asumed in the model between the pollution level and capital stock per capita. It appears from our study, however, that if the assumed value could be reduced by ⅝—an adjustment well within the error range of the data—the prediction of catastrophe would be completely erased. Since data on actual relationships between pollution and capital stock are sparse, there is no particular reason to favor one value for the ratio rather than another.

Again, in discussing the earth’s capacity to absorb pollutants, the World Dynamics model assumes, entirely arbitrarily, that the world’s overall capacity to absorb pollution is four times the present annual level and that pollution levels beyond certain limits will start affecting human mortality. While it may be true that accumulating pollution levels may destroy present concepts of living during the next 100 years, there is little evidence that life itself will be destroyed.

Furthermore, the authors do not fully consider that higher levels of industrial development will allow societies to devote additional resources to taking care of the pollution problem without sacrificing continued economic growth. It has been estimated, for example, that the United States could spend $16 billion a year, or about one third the annual increase in its gross national product, and achieve a substantial reduction in pollution over the next six years. Despite this, the United States could still increase its per capita consumption by another $900 over this period. Similarly, it has been calculated that about 80-90 per cent of present pollution can be removed at a relatively low cost: the cost increases would be about 5 per cent for industrial waste; 2 per cent for thermal electricity; and 10 per cent for automobiles.

Despite such objections to the Limits model, it should not be thought that pollution is of little global concern or that it is unrelated to economic growth. It is simply that information of the kind given above—which is extremely pertinent to the Limits projections—illustrates that pollution build-up and world collapse is not necessarily inevitable even with continued economic growth.

In general, however, the assumptions of the model regarding population, depletion of nonrenewable resources, and pollution generation and absorption should not be taken lightly. However, more study and research is needed to establish more reasonable parameters for these three critical variables in a long-term model.

NATURE OF THE MODEL

From an analysis of the basic assumptions of the model, we turned to its essential nature and methodology. Here we found that our analysis was handicapped by the extreme aggregation found in the model. The whole world is treated as one and homogenous even when it is clear that the real world is characterized by vast differences in income and consumption patterns: for instance, the per capita income levels in developed countries are 14 times those in the developing countries; and the style of development, the patterns of growth, and the composition of consumption demand vary widely in different parts of the world.

The highly aggregate nature of the model raises a number of difficulties in analysis. For one thing, it is not clear how seriously one can take averages of various variables which are widely dissimilar. For another, it makes any plausible interpretation of the model very difficult. There is only one aggregate natural resource or one aggregate pollutant, keeping one guessing as to how representative its behavior is of the real world which is marked by much greater diversity, complexity, and substitutability.

More important, it is not possible to get any useful policy guidance from such an aggregate view of the world. The real world is divided politically into a number of nation states and economically into developed and developing countries. They do not all behave similarly nor are they affected in the same manner. Thus, if natural resources are being progressively depleted, this may raise their price and benefit the producing countries which are mostly in the developing world. The transfer of resources from the rich to the poor nations in such a situation may well alter the overall pattern of growth rates. Such natural checks and balances arise in the real world but they are not allowed for in the Limits aggregate world model which moves only in one direction—toward disaster.

Before we can arrive at any useful or relevant conclusion, a minimum condition is to construct at least a “two-world” model, distinguishing between the developed and the developing world. Without a greater degree of disaggregation there is a great danger that the model may become a caricature of the real world rather than a mere abstraction.

The methodology used in the model further helps us along the road to disaster. It does not allow for economic costs and prices nor for conscious choices made by society; there are no real corrective mechanisms—only physical engineering relationships. The world keeps on proceeding in its merry way—frittering away its resources, populating itself endlessly, accumulating pollution—until one fine morning it hits disaster.

Is this a realistic abstraction from the world as we know it? In the real world, there is not one nonrenewable resource but many. They do not suddenly disappear collectively but become more and more scarce individually. As each resource becomes more scarce, price signals flash and alarm bells ring all over the world. This directs technological research into them; possibilities of substitution are explored; conscious choices are made by society to economize on them, to do without them, or to enlarge their exploitation by using marginal reserves or by recycling at a higher price. In other words, corrective mechanisms start working. Similarly, it is hard to believe that a pollution crisis can sneak upon humanity as insidiously as the model implies. Even a modest level of pollution would mean that even though the world average of persistent pollutants were still quite low and not yet obnoxious to human health, some particular localities would be suffering to a point at which corrective action would have to be taken—London, for example, introduced legislation to help purify its air and eliminate the deadly “pea-soup” fogs.

Humanity faces these problems one by one, every year in every era, and keeps making its quiet adjustments. It does not keep accumulating them indefinitely until they make catastrophe inevitable. One does not have to believe in the invisible hand to subscribe to such a view of society. One has merely to believe in human sanity and its instinct for self-preservation. While the model itself contains hardly any mention of conscious corrective mechanisms, in a larger sense its very appearance can be regarded as part of the corrective mechanism which societies devise in response to major problems.

One of the most curious parts of the model is its treatment of the role of technology. In an age of the most dramatic technological progress, the authors contend that there cannot be a continuation of such rapid progress in the future. And this is merely an assumption, not a proven thesis. The model assumes that certain things in this world—population, capital stock, pollution—will grow at exponential rates; but it assumes that certain other things—specifically technology to enlarge the resource base and to fight pollution—will not grow exponentially. Any such model is inherently unstable and we should not be surprised if it leads to disaster.

The authors’ assumptions are, however, scarcely realistic since man so far has continuously proved his ability to extend the physical limits of this planet through constant innovations and technological progress. There is no reason to think that technological innovations in conserving, recycling, and discovering new resources, and in combating pollution will stop simply because by their very nature we cannot predict them in advance.

Policy Implications of the Model

The policy implications which flow from the Limits model are the least stressed and the least developed part of the book. Yet, it is these policy implications that have attracted the greatest attention since the book has appeared. The major policy conclusion from the model is the prescription of a zero growth rate, both in population and in material production. but that prescription is not logically derived from the model. Even if one accepts some of the premises of the authors about certain physical limits to further unchecked growth, it is not clear from their work why the world must immediately move in 1975 to zero growth rates. Since the model is excessively aggregated, the authors are in no position to discuss various alternative choices which are still open to society even if physical limits to growth are conceded.

There is first the choice between development and defense. Presently, about $200 billion is being spent on defense, which is one of the major users of world resources and generators of pollution. If society is really concerned about resource constraints, could it not consciously choose to devote less resources to defense and more to development? Again, there is the choice of patterns of growth. If natural resources become more scarce, could society not decide to have a different pattern of consumption—based on more services and leisure—which is less resource-consuming? Finally, if the rich nations were to stop growing, the growth of the developing world could well proceed without putting major pressures on global physical limits, whatever these may be. These are some of the real choices that humanity faces at present and a good deal of debate is centering on them. but these choices can hardly be considered in the context of the Limits model which is sweeping in its overall policy prescriptions.

Another area of policy concern is world income distribution. If we were to accept, as the authors do, the thesis that the world cannot be “saved” except through zero growth rates, we must also demonstrate that world income redistribution on a massive scale is possible. Otherwise, freezing the present world income distribution would not “save” the world; it would only bring about a confrontation between the haves and the have-nots. The Limits recognizes this but skips the issue rather lightly as if it were a mere irritant. It does not address itself to the basic issue; how is such a redistribution to be brought about in a stagnant world? Through negative growth rates in the developed world and positive growth rates in the developing countries? Through a mass immigration of the populations of the developing countries into the developed world? Through a massive transfer of resources under a world income tax? And what is the realism of all this in a world that is rather reluctant to transfer even 1 per cent of its gross national product in the form of development assistance? While income redistribution is a desirable objective and must be pursued with full vigor, we must recognize that it is going to be even more difficult to achieve—both within and between nations—if there is no prospect of future growth and various groups fight to keep their share in a stagnant world.

The basic weakness of the Limits to Growth thesis is not so much that it is alarmist but that it is complacent. It is alarmist about the physical limits which may in practice be extended by continued technological progress, but complacent about the social and political problems which its own prescriptions would only exacerbate. Yet it is such problems which are probably the most serious obstacles in the way of enjoyment of the earth’s resources by all its population. The industrialized countries may be able to accept a target of zero growth as a disagreeable, yet perhaps morally bracing, regime for their own citizens. For the developing world, however, zero growth offers only a prospect of despair and world income redistribution is merely a wistful dream.

The shock waves generated by the Limits will do good if they start some serious academic work on the long-range issues of global survival. To the extent that they divert effort from the grave but probably soluble problems of our own day to plans for dealing with specters in the future, they can only do harm.

1

This article is based on a World Bank analysis of The Limits to Growth, undertaken by a team of which the author was chairman. The author is grateful to Messrs. Nicholas Carter, Edward Hawkins, Douglas Keare, bension Varon, Charles Weiss, and Kunniparampil Zachariah for their help.

2

Jay W. Forrester, World Dynamics, (Cambridge, Massachusetts, U.S.A., 1971), Wright-Allen Press.

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