Efficiency Improvement May Imply Loss of Economic Output

One Person’s Efficiency Improvement May Be Another Person’s Loss of Economic Output

The central theme of this website is that, in a finite world, the goal of rapid growth of the overall economy is dangerous and destructive and should therefore be abandoned as quickly as possible. Now, many people who are mesmerized by the growth paradigm and who hope that it can last for many decades (or even centuries) into the future are willing to admit that exponentially increasing consumption of energy and material resources cannot go on forever, and they may even admit a short to medium term limit to such expansion of consumption. However, they then take refuge in idea of improved economic efficiency which means getting more economic output out of given amount of production resources (energy, raw materials, labor, etc.). If efficiency/productivity gains can stay ahead of resource depletion then useful economic output and standards of living can go on rising even with constant levels of resource consumption.

In thinking about these suppositious productivity gains, it is important to realize that one person’s efficiency improvement may be another person loss of economic output. A 170lb human being driving a 6000lb pickup truck or a 400hp sports car to the supermarket to pick up a twelve pack of beer may be an inefficient way to move beer from the grocery store to the home, but bad boy monster pickups trucks and muscle cars are part of a lifestyle which their owner’s may be reluctant to abandon. Of course you may say the satisfactions of driving such vehicles are frivolous and should be abandoned for good reason (I would agree with you.). In fact, I can think of lots of other ‘frivolous’ products of the consumer culture which we could easily do without, but resource conservation via giving up unnecessary outputs is the path of negative economic growth. If sales of monster pickups, sports cars, SUVs, etc drop then an equal amount of sales of other products or services must be substituted in order to keep the economy from contracting. The effort to keep the growth economy going involves not just substituting products or services of equivalent practical utility for wasteful services and products, but rather substituting services or products of equivalent dollar value. And, in fact, even substitution is not sufficient to produce economic ‘health’ as it is defined in a system of private finance capitalism; The total volume of economic transactions must be constantly increasing.

Only if we abandon the wealth increasing paradigm in favor of a wealth maintaining paradigm is there a hope of developing a sustainable system of economic production. Of course I am not claiming that all communities at all times will have constant wealth. In many specific instances particular communities at particular times will increase their total wealth. But if constant increase of wealth by all communities at all times is the goal, then we will inevitably come into conflict with the finite nature of the earth’s resources.

December 14, 2007