From the Post Carbon Institute

Posted Oct 1, 2010 by Richard Heinberg

This is the second part of a two-part post from a new book-in-progress with the working title ‘The End of Growth’. Only some of the book’s contents will be serialized this way. The final product, with graphs and footnotes, will be published by New Society Publishers in September 2011. Read Part 1 here. Read more ‘End of Growth’ excerpts.

Business Cycles, Interest Rates, and Central Banks

We have just reviewed a minimalist history of human economies and the economic theories that have come into vogue to explain and manage them. But there is a lot of detail to be filled in if we are to understand what’s happening in the world economy today. And much of that detail has to do with the spectacular growth of debt-in obvious and subtle forms-that has occurred during the past few decades. That phenomenon in turn must be seen in light of the business cycles that characterize economic activity in modern industrial societies, and the central banks that have been set up to manage them.

This article is an excerpt from Richard Heinberg’s new book which has the working title ‘The End of Growth’ and is set for publication by New Society Publishers in July 2011. Given the urgency and fragility of the global economic crisis, the Post Carbon Institute is serializing the rough content as Richard writes it. Additionally, Richard will be offering ‘live peeks’ at the events and information that inform his writing process through Facebook and Twitter accounts created expressly for this publication.

The article was originally published as the MuseLetter #222

Introduction: The New Normal

The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.

The “growth” we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it.

The economic crisis that began in 2007-2008 was both foreseeable and inevitable, and it marks a permanent, fundamental break from past decades-a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. There are now fundamental barriers to ongoing economic expansion, and the world is colliding with those barriers.