Capitalism, demographics, and the environment, a neo-Malthusian problem?

By Kilian Tep

 

Capitalism, demographics, and the environment, a neo-Malthusian problem?

In his masterpiece An Essay on the Principle of Population (1798), Thomas Malthus expressed the idea that, as marginal returns on land decreased, the population would not be able to sustainably respond to its needs on the long run. In other words, the more the population grows, the higher the demand for food will be. However, the more we use up a land’s resources to grow food, the less it can produce; therefore, how can the population sustain itself? What Thomas Malthus didn’t forecast was the fact that technological innovation would play a prominent role in solving the issue of decreasing marginal returns on land and enabling bigger food output.

In our current society, ensuring sufficient quantities of food is now more about a proper access to farming techniques, technology and arable lands. Yet, in an era in which we seek to fight against a harmful phenomenon of climate change, we are becoming more and more aware of the environmental footprint of economic activities. Agriculture, is responsible for 15% of greenhouse gases emissions, half of which comes from meat production.

Unfortunately, given the global nature of our capitalistic economic system, this sad figure is bound to increase even more. Let’s take a step back and reflect upon the importance of demographics in capitalism. As generations of labor force age and either become too old to work and/or approach death, a certain rate of demographic growth is needed in order to ensure both the replacement of a “defunct” labor force and to sustain a certain aggregate demand. As shown by Thomas Piketty’s research, the following table[1] shows that population growth often comes in hand with economic growth:

table kilian

The correlation between demographic growth and economic growth shouldn’t be surprising after all. Since the accounting formula for GDP comprises consumption and investment, if the economy of a country is developed enough (i.e. there exists an industry), a higher population results into a higher demand for goods and services, which in turn results into a higher consumption and more investments. For social democracies that ensure retirement benefits by relying on tax revenues, a labor force replacement that numerically equates or exceeds the leaving generations is even more imperative. As the baby-boom generation will soon retire from the labor force, it is thus unsurprising that countries’ governments have been urging their populations to have more children. As a matter of fact, China made a historical decision by removing its one-child policy. Denmark recently released a very humoristic ad to encourage more pregnancy. Japan has also been worried about the very low libido of its male population for the aforementioned reasons.

Going back to the topic of the non-ecological meat production, this fundamental feature of capitalism now poses a great threat to the environment and endangers our planet even more. Populations in developing and emerging countries with high fertility rate are finally starting to reap the benefits of a high economic growth, which has, for long, resulted into an unequally distributed wealth. As these populations’ purchasing power increases, the demand for meat, which has often been considered a luxury in poor and emerging countries, will increase too. A strong base case for this idea is China and its rising middle class, whose income and demand for meat have been significantly increasing. A study by FarmEcon, a firm that analyzes global farming and food systems, forecasts that, in 2050, global population will reach around 9 billion people, per-capita GDP will near $~11,000, and annual meat consumption per person will hover around 70 kilograms. In 2015, annual per-capita meat consumption was approximately 46 kilograms for 7 billion people and a $~6,500 per-capita GDP. Undoubtedly, this higher demand for meat caused by global wealth and demographic growths will result into even more emissions of greenhouse gases and “infertilize” the ecosystems that enable us to grow food. Isn’t this issue reminiscing of the problem that Malthus previously discussed? Except that the fate of humanity will not be endangered by decreasing marginal returns but by what could be qualified as “increasing marginal pollution”: the wealthier global population gets and the more the world becomes populated, the more the impact per capita will increase.

In spite of a historical agreement signed at the COP21 aiming to curb greenhouse gases, it is unlikely that the goals set will be reached if global demand for meat is bound to increase as forecasted. Even if veganism, vegetarianism, or even global insect consumption are viable solutions, it might be a little too utopic to believe that a fundamental cultural change will operate on a larger scale.

Should we then be pessimistic about the fate of humanity like Malthus was? Not so fast. As mentioned earlier, he was proven wrong because he hadn’t predicted that technical progress would allow to solve the issue of decreasing marginal returns, so what if technical progress could also solve the issue of what was qualified early-on as “increasing marginal pollution?” Many innovators, researchers, and entrepreneurs are well aware of this global issue. Mark Post, a Dutch researcher at Maastricht University, has successfully created an in-vitro beef steak from bovine cells, whose production has a far less heavy toll on the environment and is a viable alternative to our current unsustainable mode of meat production. Once this kind of environmentally-friendly innovation is fully ready for consumption (taste-wise) and for full-scale industrialization, public policy has a key role to play in driving its deployment. Governments will have to shift subsidies from old agriculture industries to new ones, provide tax incentives to encourage the consumption of carbon-free food, and potentially fight against well-established lobbies.

[1] Piketty, Thomas. “Table 2.1: World Growth since the Industrial Revolution” http://piketty.pse.ens.fr/files/capital21c/en/pdf/T2.1.pdf

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