Economic Growth is Exponential and Accelerating - Part I

(Please see Version 2.0 of this article here).

It never ceases to amaze me how so few people truly understand that the world is progressing at an exponential and accelerating rate.  This is the most critical and fundamental aspect of making any attempt to understand and predict the future.  Without a deep appreciation for this, no predictions of the intermediate and distant future are credible.

Read Ray Kurzweil's essay on this topic for an introduction.

One dimension of accelerating, exponential progress can be seen in the economy.  Today, the US economy grows at a median rate of 3.5% per year, and the world economy at around 4.5% per year.  This is a growth rate that we have come to take for granted and expect.

But such annual growth rates were unheard of in the 19th century, or the 18th century (when the world economy grew less than 1% per year).  Things changed very little over the span of 10 or 20 years.  People expected their children to have the same living standards, and be surrounded by the same technology, as they were. 

Let's look at a graph of per-capita GGP (Gross Global Product), when viewed from the year 2000, looking backwards. 

                                                   

                                            Historical World Per Capita GGP

The accelerating rate of economic growth is apparent from the chart.  Thousands of years of human civilization before the 20th century produced modest wealth compared to what was produced in th emuch shorter interval of the 20th century.  Even with the 20th century, growth was more in the latter half than in the first 50 years. 

Now, in 2006, 4% a year is assumed, and taken for granted.  In fact, 3 billion people in the world are living in economies growing at greater than 6% a year (China, India, Russia, Vietnam, Pakistan, Thailand, Malaysia, and others).   

This would have been considered amazing, at any other time in history.  But is this just an aberration, or has the trendline itself shifted into higher gear, and can we expect this to continue, or even accelerate, in the future?  Continue on to Part II for the answer..

Comments

[Dan W]

In order for there to be growth, and in the case growth in the GGP, or Gross Global Product, there must be a concomitant exploitation of resources needed to support such growth. And, followingly, there must be a global-industrial infrastructure created to access these resources in the least expensive and most efficient manner possible. Ummm...Mr. Futurist...We're already melting the fucking Ice Cap, venting more CO2 into the atmosphere than at any other time in history by like a factor of several hundred billion particles, cutting down the forests of the world at a rate that simply does not allow for regeneration, raising livestock in livestock cities that produce more waste than entire human cities....shit, I could go on of course. But you get the point.

[Ren]

@Dan W:
Actually, over 2/3 of growth in GDP of the United States comes from a rise in productivity and less than 1/3 comes from inputs (your exploitation of the trees). Those problems you talk about can be solved AND we still can have an exponentially growing GDP as long as our productivity grows by a greater amount.

[N.T.]

And productivity is coming more from technology and less from people. Add that with the fact that the baby boomers are about to retire and we've nothing to replace them with but in debt, unqualified gen xers, along with peak oil and the climate, because no matter what we do about it, China won't do a thing. And they own our asses, so it doesn't matter. Please, dear optimistic author, check out Chris Martenson's presentation on exponential growth entitled "Crash Course" (google it). Things don't seem so grand to me.

[Gareth Evans]

So you think perpetual ***exponential** growth is a *good* thing? Do you even understand the exponential function and its implications?

OK, even if you assume 1/3 of growth comes from "inputs", that gives a 1% year on year increase in inputs needed. A DOUBLE of resources in about 70 years, assuming you can boost productivity by EACH and every year.

Add to this rising population growth, again, to possibly double in 70 years, you're looking at an insane amount of "inputs", thats *assuming* year on year productivity.

The planet is finite, and there are only **so many hours in a day** for you to get "productivity" boosts. Imagine if I ran a Company on the Basis that none of my "inputs" were finite, and I always had infinite access to resources as and when required by my growth plan. I would be considered a mad man. The Earth is in fact FINITE, however, we often behave like that mad business-man who assumes "infinite" resources.

Just open up Excel and play with some exponential graphs, you can see how stupid the mantra of perpetual corporate exponential growth on a finite plant is. There are many leading academics and mathematicians that will vouch for this.

http://www.globalpublicmedia.com/transcripts/645

[GK]

Gareth,

Your comment is ignorant on too many levels, much like the 'peak oil' doomsters.

1) You have no grasp of technological innovation and productivity increases.
2) You think exponential growth is a choice rather than an inevitability.