The Myth of America’s Green Growth
A celebrated new book shows U.S. capitalism doesn’t need to damage the planet. One problem: Its data is flawed.
Scientists are increasingly concerned about the impact that excess industrial activity is having on our planet’s ecosystems. Our pursuit of perpetual economic growth is driving ever-increasing levels of material extraction, which is causing a wide range of ecological problems: deforestation, soil depletion, habitat loss, and species extinction. The crisis has become so severe that last year more than 11,000 scientists from over 150 countries published an article calling on governments to shift toward “post-growth” economic models, focusing on human well-being and ecological stability rather than constant expansion.
But some figures have rejected this idea and are rallying around a different narrative altogether. In a book published last October titled More From Less, the Massachusetts Institute of Technology-based technologist Andrew McAfee argues that we can continue to grow global GDP indefinitely while reducing our ecological impact at the same time—and all without any structural, much less revolutionary, changes to the economy or society.
At the core of McAfee’s argument is his analysis of the U.S. economy. He claims that U.S. consumption of resources has remained steady or even declined since the 1980s, while GDP has continued to rise. In other words, the United States is “dematerializing,” thanks to increasingly efficient technology and a shift toward services. The same thing has been happening in other high-income nations, he says. This proves “green growth” can be achieved; rich countries are showing the way, and the rest of the world should follow suit.
It’s a striking claim, and it has garnered attention from a number of high-profile commentators and policymakers. More From Less received exuberant endorsements from the writer Steven Pinker, European Central Bank President Christine Lagarde, and the economist Larry Summers, plus CEOs, bankers, and a number of Silicon Valley celebrities. The Bloomberg columnist Noah Smith has repeatedly leaned on McAfee to bolster his own narrative about green growth. People find solace in this story, because it means there’s no need to worry—we don’t need to rethink our growth-based economy or question the consumption patterns of rich countries; we can just carry on with business as usual, and everything will be fine. It’s an alibi for inaction.
There’s only one problem: McAfee’s argument is based on a fundamental accounting error. McAfee uses data on domestic material consumption, which tallies up the resources that a nation extracts and consumes each year. But this metric ignores a crucial piece of the puzzle. While it includes the imported goods a country consumes, it does not include the resources involved in extracting, producing, and transporting those goods. Because the United States and other rich countries have offshored so much of their production to poorer countries over the past 40 years, that side of resource use has been conveniently shifted off their books.
In other words, what looks like “green growth” is really just an artifact of globalization. Given how much the U.S. economy relies on offshored production, McAfee’s data cannot be legitimately compared to U.S. GDP, and cannot be used to make claims about dematerialization.
Ecological economists have been aware of this problem for a long time. To correct for it, they use a more holistic metric called “raw material consumption,” which fully accounts for trade. When we look at this data, which is readily available from the United Nations, the story changes completely. We see that total resource use in the United States hasn’t been falling at all; in fact, it has been rising more or less exactly in line with GDP. The same is true of all other major industrial economies, including the European Union, and the OECD as a group. There has been zero dematerialization. No green growth. It was all an illusion of accounting.
This is a problem, because McAfee holds rich nations up as an example for the rest of the world to follow; but if rich nations are achieving “green growth” by offshoring, then this approach by definition cannot be universalized. Where will the rest of the world offshore to? This is why, when we zoom out and look at the world economy as a whole, where trade no longer makes a difference, we see that global resource use hasn’t been slowing down at all, no matter what metric you use. In fact, it has been accelerating since 2000, rising at a historically unprecedented rate, even to the point of outstripping GDP. In other words, the world economy has been rematerializing. It’s the exact opposite of green growth.
Ecologists say that the planet can handle maximum annual resource use of about 50 billion metric tons per year. We crossed that boundary in the late 1990s, and today we’re overshooting it by more than 90 percent. This is what’s driving ecological breakdown: Every additional ton of material extraction has an impact on the planet’s ecosystems.
Crucially, high-income nations are the worst offenders here—not the saviors that McAfee claims. Rich countries consume a staggering 28 tons of material stuff per person per year, nearly four times more than the sustainable per-capita boundary. In the United States it’s up to 35 tons. If everyone consumed like the United States, global resource use would run up to a staggering 260 billion tons per year. To get a sense for what this would be like, imagine our existing crisis multiplied by a factor of three.
These might seem like strange results when you consider that high-income nations have undergone an extraordinary shift to services over the past few decades. It seems reasonable to believe, as McAfee does, that this should lead to less resource use. But things haven’t turned out that way. Why not? The main reason is that incomes earned in the service sector end up being used to buy material goods. Someone might make money from YouTube but then spend it on furniture and cars. But it’s also that most services are resource-intensive in their own right: cruise ships, airlines, hotels, resorts, real estate, retail, tourism—all require significant material inputs.
Given the evidence from the past few decades, there’s no reason to believe that shifting to services is somehow magically going to reduce our resource use. It’s time to put that myth aside.
What about technological innovation? McAfee argues that efficiency improvements will cut resource use. And in theory, that’s true, all else being equal. But in growth-oriented economies, savings from efficiency improvements are typically reinvested to expand the process of production and consumption, which ends up causing aggregate resource use to rise. For instance, if a soda company finds ways to use less metal in its cans, it will immediately invest any savings into expanding the business by, say, pumping out advertising to get people to buy more soda.
In other words, growth ends up wiping out the gains we achieve through efficiency improvements. And this raises a real challenge in terms of policy going forward. If technology hasn’t helped us reduce total resource use so far, it doesn’t make any sense to hope that it will somehow magically happen in the future. Don’t get me wrong: We need all the technological innovation we can get in our fight against ecological breakdown. But ultimately it’s not our technology that’s the problem; it’s growth.
On top of all this, scientists are beginning to discover that there are physical limits to how efficiently we can use resources. Sure, we might be able to produce lighter soda cans, but we can’t produce them out of thin air. We might shift the economy to services like gyms and restaurants, but even these require material inputs. There is always a limit to how lightweight something can be. And once we approach that limit, then continued growth causes resource use to start rising again.
This question was recently studied in detail by a team of scientists in Australia. They ran a series of models with extremely optimistic rates of efficiency—faster than anything that’s ever been achieved before. What they found is that while resource use might decline temporarily, it quickly recouples with GDP as we reach the limits of efficiency. This evidence throws real doubt on green growth narratives. “It is misleading,” they concluded, “to develop growth-oriented policy around the expectation that decoupling is possible.”
So where does this leave us? What are our options? If we want to reduce resource use—which we must do if we are to avert ecological collapse—then we cannot wait around for dematerialization to somehow miraculously occur, when all the evidence suggests it’s not going to happen. We need to be smarter than that.
The only fail-safe strategy is to impose legally binding caps on resource use and gradually ratchet it back down to safe levels. Ecological economists have been calling for this for decades. In a way, this is an elegant solution to the long-standing debate about green growth. If McAfee and others really believe that GDP will keep growing despite active reductions in material use, then this shouldn’t worry them one bit. In fact, they should welcome such a move—it will give them a chance to prove once and for all that they are right.
But, to my knowledge, not a single proponent of green growth has ever agreed to this proposal. Perhaps on some deep level, despite the rosy rhetoric, they realize that this isn’t how capitalism actually works. For 200 years, capitalism has depended on extraction from nature. It has always needed an “outside,” external to itself, from which it can plunder surplus value, for free—or as close to free as possible. To put a limit on material extraction is to kill the goose that lays the golden eggs.
There is a deeper question that we need to address here. McAfee and others go to such extraordinary extents to justify perpetual economic expansion because they start from the assumption that we need it. They assume that GDP is necessary for human well-being. Indeed, they seem to see it as a proxy for human progress itself.
But is it true? The evidence suggests otherwise. Let’s take the United States, for example. The United States has had extraordinary GDP growth over the past four decades. But, oddly, enough, real wages are lower today than they were in the 1970s, and poverty rates are higher. Why? Because virtually all of the gains from growth have gone to those who are already rich. The incomes of the richest 1 percent have more than tripled since 1980, soaring to an average of $1.5 million per person. In other words, we’ve all been pressing on the accelerator of growth, with devastating consequences for the living world, all to make rich people richer.
When you look at it this way, it becomes clear that the United States doesn’t need more growth in order to improve people’s lives. We can do it right now, without any growth at all, simply by sharing what we already have more fairly. Equity is the antidote to growth—and a much saner way to achieve our social goals.
The key point to grasp here is that beyond a certain level, which high-income nations have long since surpassed, the relationship between GDP and well-being completely breaks down. There are dozens of countries that outperform the United States on every indicator of human well-being, with significantly less GDP. Take life expectancy, for example. Japan beats the United States in life expectancy by more than five years, with 35 percent less GDP per capita. South Korea also beats the United States with 50 percent less GDP per capita. Portugal, too, with 65 percent less GDP per capita. Costa Ricans live longer, healthier lives than Americans, with 80 percent less GDP per capita.
We can see the same pattern playing out when it comes to every measure of human progress, from education to employment, health care to happiness. Over and over again, empirical data shows that it is possible to achieve high levels of human welfare without high levels of GDP with significantly less pressure on the planet. How? By sharing income more fairly and investing in universal health care, education, and other public goods. The evidence is clear: When it comes to delivering long, healthy, flourishing lives for all, this is what counts—this is what progress looks like.