The growth engine

Inge Røpke

Since the start of industrialisation and especially during the post-WW2 period, we who live in the rich countries have been able to increase our material consumption significantly. In the figure below, some of the key mechanisms behind the growing consumption are outlined. In the accompanying explanation, the numbers in brackets refer to the boxes in the figure. This section illustrates how the unequal distribution itself contributes to growth of the metabolism.

Consumption and growth Figure reduceretThe basic prerequisites for growth in consumption
There are two basic prerequisites for the strong growth of living standards in the rich part of the world. First, the significant growth in consumption since the start of industrialisation would have been impossible without access to cheap fossil fuels (1). Fossil fuels equip us with many ‘energy slaves’ that are used to mechanise production processes and allow large increases in labour productivity, i.e. in the production of goods per work hour. Until recently, fuels have, in general, been relatively cheap because extracting them has been cheap – but prices have also fluctuated and have been heavily influenced by particular political conditions. In contrast, prices only reflect the long-range of environmental and social costs caused by the extraction and use of fossil fuels to a very limited extent. Such costs include mining accidents, oil spills, acidification, particle pollution and global warming. As these costs are not reflected in the price, economic growth can be said to be based on ‘false assumptions’, and after more than one-hundred-and-fifty years with these assumptions, they have been built into the social and physical structures of society, such as the development of private car ownership and the associated road systems, suburban developments and shopping centres based on low petrol prices.

The second basic prerequisite for high consumption is linked to international relations and the balance of power between the countries in the world system as the early industrialised countries achieved a power position that made it possible to procure raw materials and exploit cheap labour in other parts of the world (2). As industrialisation developed, international relations were already marked by the European countries’ colonisation of other parts of the world, and industrialisation reinforced the need to collect raw materials in the colonies. For example, England obtained cotton from India for the development of its textile industry, while India’s textile production was undermined by trade restrictions. Not least with the help of protectionism, a number of European countries, the United States and Japan managed to catch up with England, which had been leading in terms of industrialisation, while the colonies were kept as commodity suppliers. Despite decolonisation after World War II, raw material exports still play a major role in many countries, partly because many mechanisms in the global trade and capital transfer systems make it difficult to break the patterns. A certain amount of industrialisation in connection with the relocation of activities from rich to poor countries has occurred, and the global production chains ensure cheap goods from work in the global sweatshop. In addition, political interventions support access to raw materials and agricultural goods in slightly more elegant ways than the military coup in Guatemala, which, as described by the ecological economist, Juliet Schor, secured the ‘cheap banana’ in 1954. However, as discussed in the section on trade and globalisation below, some countries, such as South Korea and China, have successfully established an internal industrial dynamic and changed the country’s position in the world system.

The global balance of power has made it possible to obtain cheap raw materials from mines, forests and agricultural land in poor countries, and gradually the low-paid labour has also delivered industrial products such as textiles, electronics, toys, etc. at very low prices. In biophysical terms, the massive growth in international trade since the Second World War has contributed to the fact that the population in rich countries have been able to increase their material living standards very significantly: the low prices mean that a lot of material resources can be bought for the money. Even in the poor countries, some groups have become richer, but in many places, trade union organisations and social systems are weak or non-existent, so there are large groups that do not receive much of the results. In addition, the environmental costs are enormous including pollution, deforestation, the impoverishment of soil and water resources, while in many areas, native populations have been crushed as resources are extracted in increasingly remote areas. In the field of ecological economics and political ecology, a key research field involves highlighting the environmental conflicts that arise as a result of the extraction and processing of raw materials and the disposal of waste.

 

Environmental conflicts

The unequal global balance of power and the activities of large companies around the globe often give rise to so-called environmental conflicts, where local populations and other activists fight against an environmentally harmful activity of a company or state. The term ‘commodity frontiers’ is used to denote the hot spots where such environmental conflicts arise. Commodity frontiers, thus, refer to the places in the world where the extraction and processing of raw materials and waste disposal take place.






In a major international research project called EJOLT (Environmental Justice Organisations, Liabilities and Trade), researchers and activists, for a number of years, have mapped and described environmental conflicts worldwide in an interactive atlas called the Environmental Justice Atlas (see http://ejatlas.org/). The aim of the atlas is to give a voice to groups who are struggling for environmental justice and to focus on endangered local communities, which are often powerless against multinational companies and national politics and are rarely represented in the media. Furthermore, the project’s goal is to draw attention to the negative consequences of the privatisation of natural resources such as water.


The atlas provides several opportunities for locating and investigating environmental conflicts around the world. It is possible to search for conflicts that involve a particular resource (water or gold, for example) or for conflicts involving a particular company (e.g. Shell).


One of the conclusions of the project is that the adverse consequences of the extraction and processing of raw materials and the disposal of waste are unfairly distributed and most often affect the poor, women, minorities and, in particular, indigenous peoples.

The driving forces behind consumption growth
The basic preconditions for high consumption – cheap fossil fuels and access to other cheap resources and labour – are complemented by a strong engine: market economy competition (3). A capitalistic market economy is based on competition between the producers, who must constantly strive to develop technological and organisational innovations (4). If a company’s activities are insufficiently profitable, it will not be able to attract capital and ensure its long-term survival, and renewal is crucial to profitability. The innovations partly aim at reducing costs, and partly at offering consumers new and tempting goods and services. When energy is cheap, efforts to reduce costs will be concentrated on increasing labour productivity through mechanisation and automation, where energy in combination with machines replaces labour (5). This focus is enhanced when employees succeed in obtaining higher wages and greater social security through the formation of trade unions and the establishment of a social security net in the welfare state (6). Such strength positions enable employees to get a share in the yield of increased labour productivity and achieve an ever higher standard of living – a process that encourages a continued focus on increasing labour productivity. However, not all production processes are easy to mechanise: It is difficult to provide certain labour-intensive services such as care, repair, hair cutting and theatre performances more effectively through the use of fossil fuels, so they tend to become increasingly expensive compared to material goods. In this way, consumers are motivated to buy more material goods rather than ‘sacrificing’ still more of these in order to purchase labour- intensive services.

Automatic nursery machine. Relative prices: One of the reasons for increasing material consumption is that it is much easier to mechanise the production of material goods than services such as care. Therefore, care becomes still more expensive measured in material goods. Drawing: Claus Deleuran. Used with permission from the family.

When employees succeed in gaining higher wages, a market for the products that are produced by the companies emerges and consumer demand is stimulated by the supply of new consumer goods, new variants of known goods (7) and various forms of promotion such as advertisements and hire purchase systems (8). Everyday life becomes increasingly embedded in commercial offers as both television and public spaces display the many tempting opportunities. With the exception of the periodic crises, the supply and demand of consumer goods, thus, reinforce each other: Increasing wages ensure customers’ ability to purchase the products (9). The mutually reinforcing circle of supply and demand, productivity growth and rising standards of living constitute a growth engine that enlarges the biophysical metabolism over time. However, supply and demand are not always in balance at the macro-level – demand may be insufficient; the profitable investment opportunities too limited; bubbles in the financial sector may affect the real economy – so in periods, growth is interrupted by economic crises involving bankruptcies and unemployment.

Maintaining consumption growth: normalisation and lock-in
Most people in the Global North willingly play their role as consumers in the growth engine and do not consider themselves to be particularly extravagant. This is due, among other things, to the processes linked to normalisation and lock-in (10). When there is an economic boom, there is often a craze for a particular type of consumer good, as illustrated, for example, by the wave of housing improvements (first kitchens and then bathrooms) that were made up to the financial crisis or the purchase of flat screens in the 2000s. When the boom is in progress, improvements may seem extravagant and feel like pampering, but as time passes, the new standards become normalised: Having more than one bathroom in the home and flat screens in several rooms will become the new norm and will be expected. Some normalisation processes involve changes on several levels, such as changes in social discourses, political measures, institutional renewal, construction of infrastructure and new scientific insights. The story of the spread of air conditioning in a number of countries is an interesting example of a normalisation process that involves all these aspects, and currently, the integration of information and communication technologies in everyday life provides an opportunity to study such processes in full development.

When new products and a higher standard of living become normalised, the new standards are built into society’s social and material structures and can, thus, develop into a form of constraint. In a car-based society with vast suburbs and an inadequately developed collective transport system, the car becomes a necessity, or at least a good that is difficult to do without. In this way, the other side of the coin of freedom is constraint. When there are no longer any local stores, you have to shop in the supermarket and when houses are built to include air conditioning, they can be uninhabitable without, and when music can no longer be purchased on vinyl, the music lover must start to buy the new media. In addition to material constraints and incentives, various institutional factors can also help maintain living standards and consumption patterns. For example, car transport is encouraged by regulatory institutions such as transport allowance and the demand that unemployed people must accept job offers from employers located far from their homes. Normative and cognitive institutions, such as the perception that passing a driving test is a ritual step on the way to adulthood and the tendency to associate the car with personal freedom, have a similar influence.

In general, social and material inflexibility can help to bind consumers to resource-intensive lifestyles. For example, the labour market institutions in many countries are calling for full-time employment because the rules make it more expensive for employers to have a large number of employees sharing a set number of work hours. When the system encourages employees to choose income instead of leisure time, it initiates a process that Schor has termed a ‘work-and- spend cycle’ – a cycle that is also stimulated by the busyness of modern families and the development of shopping as a popular recreational activity.

The ideological and political framework for consumption growth
The engine of consumption growth functions within a supporting framework of cognitive understandings and policies. The cognitive understandings (11) include the idea of economic growth as an absolute good, regardless of the standard of living a society has already achieved. There are many other ideas such as: welfare is directly linked to income; economic growth in the rich countries has a positive effect in poor countries through the demand for their products; free trade is good for all parties involved; markets and healthy competition contribute to the common good; technological change is synonymous with social progress; and environmental problems can be solved with more efficient technologies. These ideas are controversial, but they are still dominant and are reflected in different policies (12), such as the promotion of free trade (although at times excluding trade restrictions, which are beneficial to the rich countries) and competitiveness, the privatisation and liberalisation of markets, the implementation of consumer policies that focus on ensuring low prices, the construction of more and more highways and the continuance of low energy prices.

Next: Trade and globalisation