The End of Growth: Adapting to Our New Economic Reality

Richard Heinberg, New Society Publishers, 2011

Reviewed by Graham Mulligan

This is a ‘living book’ updated at

Heinberg is a Senior Fellow at the Post Carbon Institute and leading educator on Peak  Oil.

The book presents the reader with an economic argument, beginning with a brief review of how economies have evolved through history. The significant point here is the ‘take off’ based on cheap energy. 20th Century economic theory has evolved two competing ideas: Capitalism and Communism. Capitalism itself has two competing theories as well: Keynsian social liberalism and the Austrian School (Friedrich von Hayek see: or Chicago School (Milton Friedman, see: that elevates the market to supreme status. The fundamental error of both philosophies however, is the dependence on continual growth in the economic system. The deeper error in theory is that Nature (land, earth resources, environment) is subsumed in the category: Capital. Climate change and resource depletion have intruded upon theory.

The ongoing financial crisis of 2007 – present day, is the subject of analysis by many theorists. In this book the banking system plays a key role with its reliance on the ability to create debt through ‘fractional reserve’ strategies. Debt strategies are called leverage and in the deregulated environment of the US banking system in the late 1990’s and early 2000’s this led to the 2008 mortgage collapse.

Government debt, household debt, corporate debt and financial sector debt are all like a Ponzi scheme (, dependent on the idea of growth. Stimulus and bailouts don’t seem to have an effect. Inflation and deflation loom ahead but no one can say which will occur. The Keynsians ‘spending bridge’ leads to nowhere and the free-marketers austerity proposals risk social upheaval.

The response to the challenges of depleted resources and growth slow-down is argued by some economists and futurists to be found in technological fixes (innovation, subsitution and efficiency). These kinds of ‘fixes’ in the past 200 years, Heinberg argues, were based on an energy-rich world which is fast disappearing.

Growth in China’s economy is also showing signs of slow-down, in fact, the overbuilding of factories and apartment blocks and the fierce over-bidding for condo space closer in to the center of the big centers has led to a housing bubble that is now turning. Heinberg suggested this would occur over the next 2 years and it has begun already (late 2011). China’s ‘get rich before growing old’ strategy may or may not work but already social tensions are appearing. The battle over currency is another point of tension that can erupt easily (see: and  (Explore US Census Bureau’ International Data Base:

The first 3 chapters details how economic growth is going to come to an end and chapter 4 explains how market mechanisms won’t work indefinitely. Chapter 5 looks at consequences of end-of-growth. The possibility of large-scale crisis coming suddenly is highly likely in the context of energy shortage/depletion, climate change, resource depletion and financial-monetary collapse. Chapter 6 looks at what government can do, what may be possible if the process is managed well.

Economist Niall Ferguson describes six ways of resolving debt crises (increase growth; reduce interest rates; bailouts; austerity; inject money; default). Heinberg proposes injecting money and defaults are the best way to control the crisis now. Apply a ‘haircut’ of 75-90% (default) on all debt. This is a ‘re-set’ of claims against real assets. At the same time the government can issue debt-free money to keep economic activity going on a managed basis. But this doesn’t solve the resource depletion, including declining energy, and the climate change or population challenges.

Alternatives to the money system could also offer a solution, such as credit-clearinghouse schemes and use of local currencies. These are more than bartering, for example, air-miles used by airline companies and clients. (See: TEDx Berlin Bernard Lietaer

See also:

Peter Victor – Managing Without Growth

Herman Daly – Ecological Economics (Steady state economy) Happiness Index – (

Lester Brown – World on the Edge: How to Prevent Environmental and Economic Collapse, 2011

Albert Bates – The Biochar Solution: Carbon Farming and Climate Change, 2010

The Millenium Assessment of Human Behaviour –


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