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Living standards in the era of declining marginal returns

By Cameron Leckie - posted Thursday, 1 April 2010

"Growth for the sake of growth is the ideology of a cancer cell."  Edward Abbey (1927 - 1989)

Arguably the biggest barrier standing in the way of addressing the multitude of stressors on our global civilisation can be summed up in two words: living standards. To a large extent, current political debate focuses nearly entirely on maintaining or improving current living standards. A perfect example is Wayne Swan’s recent statement during an interview on Radio National that Australia must maintain high levels of immigration and increase productivity to maintain living standards as our population ages. Regardless of the accuracy or otherwise of this view, this approach, like most contemporary debate, misses the point.

The point is that to address the complex issues that are challenging global industrial civilisation; such as an exponentially growing population, climate change, peak oil, resource depletion and a dysfunctional economic system, will require an acceptance of a lower standard of (material) living. This is the antithesis of the key meme’s of our society, such as consumerism, faith in “the market” and technological progress. These religious type beliefs have, however, one problem, the problem of “if”:

  • if future economic growth will pay off debts;
  • if electric cars can reduce our oil dependence;
  • if [insert preferred alternative fuel/s] can replace oil;
  • if nuclear fusion will work. Etc.

There is however a small issue in that most if not all of these “if’s” must be successful for these meme’s to have validity. Unfortunately this, which can be said with some certainty, is highly unlikely to be the case. The reason that this can be asserted is based upon the research of Joseph Tainter, the author of The Collapse of Complex Societies. Tainter concludes that human societies are problem solving organisations that increase in complexity to solve problems. Over time increased complexity as a problem solving approach becomes subject to declining marginal returns. Once a society reaches this point the advantages of further complexity become outweighed by the costs of maintaining current levels of complexity. At this point a “collapse” to a lower level of complexity is likely, if not inevitable. Arguably, industrial civilisation is now facing declining marginal returns in many areas. Some examples:

  • our debt based economic model where debt levels must continue to expand in order to maintain growth, or at least the illusion of growth;
  • new oil discoveries. When compared to the giant and super giant onshore oil fields discovered during the middle decades of last century, new oil discoveries are smaller, costlier from both a financial and energy perspective and more challenging both technically and geo-politically;
  • our medical system. As one serving federal MP told me, it doesn’t matter how many doctors are thrown at the health system, or how much money, the system is just too complex and cumbersome to fix;
  • the billion-dollar costs of tunnels, roads and bridges that will only marginally reduce traffic congestion in our cities;
  • mineral ore grades are declining, resulting in both increasing quantities of overburden as well as increased energy required for extraction;
  • modern industrial agriculture where reduced soil fertility and soil loss require ever increasing quantities of chemical inputs to maintain yields; and
  • the benefits of economic growth. If you don’t have access to running water, sanitation or effective health and education systems, the return on economic growth is great. Striving for growth that results in a second car, designer clothes or an overseas holiday has significantly less value in comparison.

Despite the importance of declining marginal returns it does not rate a mention in contemporary political debate. The only possible future portrayed by the major political parties is onwards and upwards. Maintaining business as usual, or at least the façade of it, appears to be the main preoccupation of our politicians with the support of the mainstream media. True, we Australians have, to this point, done pretty well out of the globalised neoclassical economic experiment but it hasn’t been all plain sailing. Despite our high levels of comparative wealth, we have numerous societal issues which are, at least in part, as a result of our consumer based individualistic society. These issues include illegal drug use, mental health illnesses, obesity, rising levels of violence, unhealthy levels of personal debt and a vast disparity between the haves and have nots.

Despite the many ills of modern society, for many of us in first world countries, it has provided an unprecedented level of material living standards. Herein lays the dilemma. The actions we need to take to address the myriad problems we now face are actions that our collective discussions seem unwilling to raise let alone take. The reasons for this are related to the wealth and power generated by our current system. The result of course is entirely predictable. Industrial civilisation is liable to collapse to a much lower level of complexity than is necessary to address the predicaments we face. To add to our confusion, is the extended timescale over which this collapse is likely to occur. It probably won’t be an apocalyptic event Hollywood style, rather a drawn out process over decades interspersed by periods of so called recovery such as that which we are now enjoying.

If we are to avoid the fate of civilisations past, that seems to repeat with historical regularity, we need to reframe our visions of the future. Life as we transition from abundance to scarcity industrialism does not necessarily need to be a misery; indeed there are numerous opportunities to create a healthier, more fulfilling society. Maybe this is why the number of Transition Towns, towns that are proactively responding to both climate change and peak oil, has grown so rapidly in the last couple of years.


Transition initiatives acknowledge that climate change makes reducing greenhouse gas emissions essential and that peak oil makes it inevitable that energy use will be reduced. Rather than taking a doom and gloom approach, Transition initiatives aim to make the transition feasible, viable and attractive by implementing projects at community level that increase resilience to external shocks while encouraging local employment, food production and energy harvesting.

While Transition initiatives can address some of the issues we now face, reforming our economic system must be the foundation upon which the changes necessary to avoid collapse must occur. This reformation must consider the “economy” as but a subset of the greater biosphere. While this is anathema to the current mainstream view, there are some well developed theories on how this can be achieved. An example might be a Steady State Economy, such as proposed by retired World Bank senior economist, Herman Daly. There are also a number of organisations in Europe researching Degrowth as a method of obtaining ecological sustainability and social equity.

The fundamental issue at hand is about choice. If we choose to maintain or improve current living standards by maintaining business as usual for a little bit longer, whether that be months, years or a decade or two, then the collapse, if and when it comes is likely to be all the more deeper, more protracted and more traumatic.

If on the other hand we recognise that we are now at, or approaching, the point where civilisations past have begun their decline phase and respond accordingly, the reduction in complexity, and the process by which this reduction occurs, is likely to be less protracted, less severe and arguably one of the most exciting times in human history.

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About the Author

Cameron Leckie has a Bachelor Science and a Graduate Diploma in Education. Employment experience includes a range of management positions both in Australia and overseas in the telecommunications industry. He is a member of the Australian Association for the Study of Peak Oil and Gas (ASPO Australia). Since finding out about peak oil in 2005, he has written extensively on the topic and in particular, its impact on the aviation industry.

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