We’re constantly bombarded with news that suggests the global economy is enjoying an indefinite growth spurt. Britain is in year 15 of a boom, China and India are the economic super powers of the future, America grows steadily despite all Bush’s attempts to the contrary. Even in continental Europe, which we’re told is well on the way to humiliating economic decline, average annual growth is still something like 2%. There may be bad years, and for heaven’s sake don’t mention sub-Saharan Africa, but on the whole we’re all climbing up, up, up towards wealth unimaginable to our forefathers.
You can see why people believe this. Taken as a whole, the world has got richer just about every year since the 18th century. The Industrial Revolution broke us out of the Malthusian trap, in which more people meant less food, and we were away into a world in which each generation in the developed world could realistically expect a little more than their parents had.
Okay, so the pattern didn’t hold in much of the third world, but that was just a question of bad policy/corrupt government/post-colonial malaise (delete as appropriate).
But what if this can’t go on forever. What if we’re approaching a second, more intractable Malthusian trap. What happens if there just aren’t enough resources on this planet to sustain 6 billion people in Western lifestyles.
I don’t want to worry anyone, but commodity prices have almost doubled in the last twenty years. That to me suggests demand is outpacing supply. And, while it’s quite conceivable that when oil prices get high enough we’ll switch to renewables, it’s much harder to work out what we can do when we start running out of copper or zinc. Maybe there just isn’t enough metal on earth to provide every one of us with a car and an iPod.
So come on then, free marketeers: how are we getting out of this one?