But of course there are only finite amounts of energy sources and minerals on the planet, so our quest is ultimately doomed to failure. Furthermore, we will always naturally go for the most easily accessed resources first. This means that we have a physical resource-base that is constantly shrinking in quantity and quality and/or accessibility.
Meanwhile maintaining existing infrastructure and battling the growing entropy soaks up more and more of the available energy, leaving less and less for growth.
Debt is the promise of a more profitable tomorrow that we use to ‘ramp up’ our purchasing power in the present. In fact we can understand burgeoning global debt, the erosion of interest rates in developed nations, the legalisation of share buybacks, the securitisation of debt and the growth in increasingly arcane and complex financial instruments generally as an attempt by the global economy to compensate for the encroachment of the growth-limits outlined above. We can trace this all the way back to Nixon’s cancellation of the direct international convertibility of the US $ to gold back in 1971, which occurred just after the US passed peak conventional crude production and as their imported oil rose significantly in cost.
Debt must be paid back with interest accrued, so a debt-based system is fine until tomorrow is less profitable than today – then it takes on the characteristics of a Ponzi scheme.
The increasingly fractious and polarised politics we are seeing in various parts of the world is a predictable response to this underlying sense of lack and the unease it generates. When people feel that their economic prospects are constrained or threatened they will vote or protest accordingly. Demagogues can rise to power. Wars can start.
Perhaps more likely than a global conflagration is that the financial system seizes up, as it so nearly did in 2008. Certainly the central banks are now in a much weaker position to cope with any downturn – interest rates cannot be cut significantly from where they are – and their putative cures are in any case themselves acting as slow poisons. [Update pending, as soon as I can find the time.]