How to make a theoretical economy grow when both average consumption of nonrenewable resources per person and total population are constant?

Question

This is a problem of my imaginary country Zeroth Reich. I imagined that this country is populated with literal eco-fascists. Both the people and the government care about Mother Nature a lot and demonstrate this by restricting and self-restricting consumption of nonrenewable resources. For example, cars are officially banned from individual use. People are supposed to use public transport instead. Population growth is restricted and regulated too, so the size of the population is held constant.

Zeroth Reich uses a regulated free market, because government officials believe that competition in free market allows to use resources more effectively than in a planned economy.

Customers from Zeroth Reich don't buy things made from nonrenewable resources without very good reasons, because everybody wants to keep his/her individual consumption of nonrenewable resources as low as possible. For example: If it's for short-time use(like comics and books), then they prefer to borrow or rent it. If it's broken, then they try to fix it. If it's still useful, but they don't need it anymore, then they try to sell or gift it. If they can buy required thing from second-hand shops, then they buy it. So average consumption of nonrenewable resources per person is more or less constant.

As for firms, they are under pressure from both the government and customers. Overuse of nonrenewable resources without good reasons is frowned upon, legally risky, and costly. For example, even if one is the CEO of a prosperous corporation, it doesn't mean that they can have a car for individual use, they must use public transport as everybody else. Another example, helium is very cheap (in case of unregulated free market), yet it's a nonrenewable resource. In order to limit its consumption the government limits the overall quantity of helium that can be sold on local market during this year. The same goes for other nonrenewable resources. The limits are held constant. So the total maximum of consumption of nonrenewable resources is constant.

In order to keep things simple let's suppose that there are no other countries.

So, how can one MAKE an economy grow in such circumstances? Give me your ideas.

P.S. As for me, I think that Zeroth Reich needs to fix minimal prices of goods. In this case firms that use nonrenewable resources wisely would receive more profit than wasteful firms. So firms would be always able to increase their profit by using less nonrenewable resources. Otherwise (without fixing minimal prices) competitors would make them lower their prices. What do you think about it?

Answer 1

Virtual Goods

There's no need to increase your consumption of non-renewable resources in order to sell virtual goods for hundreds of dollars based on nothing more than artificial scarcity. We already do this, to some extent, with economies springing up around the (often illicit) sale of virtual goods in games like WoW or Second Life. All that's required to increase the economy in a world where the sale of virtual goods is a major driving economic force is that the scale of such economies be increased.

One possible major driver of this kind of economic activity could be the rise of augmented reality. Both vanity items, like a virtual pet, as well as practical items, like a personal assistant, would be things that people could interact with as part of their lives on an everyday basis. Neither would require the expenditure of any additional resources, other than perhaps a tiny amount of electricity required to run the hardware in which they're stored. Demand would be maintained by changing fashions, with individuals spending money to keep themselves equipped with the latest trends and models.

More complicated virtual goods would be both more expensive and require a larger team to create, fueling increases in both labor participation and item cost over time. The development of tools, such as rendering and design software, would also boost the economy, once again without increasing consumption of non-renewable resources.

Answer 2

You mention price-fixing and a free market economy. These tend to be mutually exclusive.

How are cars automatically a problem with 'non-renewable resources'? Cars that run on gasoline sure, but there are electric cars and plenty of engines that can run on vegetable oil, which is a very renewable resource.

If information was available of use of different non-renewable resources (required by law), then people would be able to see who uses what and make decisions based on that.

Wind, solar and hydro-electric power would be making huge inroads into power generation.

With as much 'repurposing' being done as you claim, then that is where much of the economy will be growing. manufacturing will be down, except for the common bits and pieces that fail in equipment. The innovations would tend to be in either making products more efficiently with less resources or increasing the life expectancy of a product by designing it better so they will last longer.

So if a part tends to burn out much quicker in your hand drill than the rest of the parts (often the battery), the focus would be to either make the batteries cheaper and easier to replace, making the batteries easier to reclaim and/or designing them to last much longer. (This is actually what is happening with cordless drills).

I suspect that these economies will grow slower, but still grow and quite likely be more consistent with milder peaks and valleys.

Answer 3

You supplied the answer yourself. The economy will grow at least in the following directions:

• increase of the non-renewable usage efficiency. This also includes recycling. Reclaiming old waste disposal fields could be a powerful economic motor. In some places in my home country, seven hundred years ago they mined for silver. They wasted a whole mountain-worth of rock and ore to extract several hundred tons of silver. Years later, they discovered that silver ore contained platinum, and mined the mountain of waste accumulated before to extract the platinum, dumping the new waste (also) in the old, exhausted silver mine. Then they discovered they could get at, I don't remember in what order, zinc, nickel and other stuff. Every time, the enormous mountain of worthless waste became almost overnight a new mother lode. Your government could ask for a flat tax and for the area to be returned to its pristine, uncontaminated state, and the firm who best knew their shit would stand to make millions.

• replacement of non-renewable materials with renewable ones. For example, graphene lattices from atmospheric CO₂. You can actually synthesize gasoline from solar energy, rainwater and CO₂ (it's a variation of the Fischer-Tropsch process), thus limiting the amount of rare earths and precious metals required by complex electric vehicles. Bamboo grows rapidly and can replace an impressive range of construction materials.

• bioengineering. Imagine bacteria capable of eating trash and producing fertilizer. They already exist, but imagine bacteria capable of doing that faster, better, and with a wider range of trash and environmental poisons.

• development of cleaner processes to drive other economic sectors. For example you could strive to build entire arcologies deep under water (or underground), and run them as mostly closed systems, only requiring energy from outside. This would also require very clean fusion plants or energy harvesting satellites; even the most eco-conscious people would have few qualms against beaming microwaves to rectenna fields in the middle of, say, the Sahara Desert.

Answer 4

One way that this economy could grow, and which would fit in very well with the principles espoused by its citizens and government, would be to use resources more efficiently. The key is the development of technology.

For example, at a lower level of technology, a computer inhabits a large room and draws hundreds of kilowatts of power, while being relatively sluggish in terms of operations-per-second and relatively limited in its interface. Only well-endowed universities, large corporations, or government agencies can afford one, and society as a whole can't afford very many without exceeding its annual allotments of resources. At a higher level of technology, a computer can fit in the palm of your hand, while drawing only a few watts of power. Its capabilities are even greater than those of the past era's supercomputer, and its interface is far more powerful and easier to use. Now, for the same resource cost of one giant university computer, you can provide thousands of smartphones to the general populace.

Another key way to improve the economy is through the people who make it run. Achieving optimum employment is a good start, but obviously that can only go so far: 100% of the adult population working 6-8 hours per day is probably an optimum balance of productivity vs. morale. Better education offers a higher ceiling for improvement. A worker with more skills can contribute more, and accomplish more with their time, than an unskilled drone. Technology can help here, too. Imagine a skilled carpenter armed with power tools, or a tailor with a sewing machine, compared with those same people using more primitive equipment. These tools come at some cost in terms of resources, but people's time is a non-renewable resource, too. Making each worker more efficient and advancing their capabilities through education and technology can make this economy thrive.

Answer 5

While a certain portion of any economy will revolve around the creation, distribution and consumption of physical products, a large portion of the growth in the modern US economy is based on services in a so-called "post-industrial" economy. This is visible as the huge degree of outsourcing that one sees today. Practically everything can be outsourced: payment processing, server infrastructure, HR management, business strategy, and so on and so on.

If Zeroth Reich has reached the appropriate point of industrialism, it may be possible to transition to a post-industrial services economy.

Be careful with price-fixing though as markets can do really weird things when price floors and price ceilings are imposed. Ceilings can cause shortages and hoarding. Floors can cause gluts of resources (which is especially important to avoid in resource-conscious Zeroth Reich.)

Answer 6

Economic growth comes from people figuring out how to get more work done with less effort. The economy you describe would grow just fine,just in different directions than ours because the people have different priorities. Although you probably won't be able to expect them to support nearly as large a population as we do. (but there is a way. I'll get to that...)

There aren't may "non-renewables" they'd likely need to worry about using up however. They all have perfectly viable substitutes, the "non-renewables" are just cheaper to use. You can make oil from any organic matter at up to 80% efficiency, and metals don't just evaporate if you toss them in a landfill, so as soon as it becomes easier to extract and refine scrap from the old waste deposits than to find new, natural deposits it will all get recycled. (This is already happening in some places on our world as our refining technology improves.)

Which brings us to the real reason they might potentially have trouble with growth: In their quest to not use "non-renewable" resources, they are wasting vast quantities of the one truly non-renewable resource -- Time.

A personal car is a big investment of "non-renewable" resources, sure. But if it lets a person get to work in 20 minutes instead of 2 hours, that turns into an extra 3 hours and 20 minutes per day that they can actually do something useful. Like invent new ways to save more time...

So, if you want to keep the economic growth going full-tilt, make them a post-industrial society. They already have a machine infrastructure to be able to build whatever they need at a moment's notice. Their resource extraction is entirely robotic. Their repair facilities are entirely robotic. The only thing the people really have to do is provide direction. Mass transit is fine because nobody's in a hurry to get anywhere, and besides, it gives you a chance to meet new people. Repaired items are just as good as new ones because they've essentially been remanufactured with robotic sorting of the waste stream of broken items coming in to shuffle each individual piece off to where it can be used with the least amount of effort. Extremely modular technology so that the same computer that runs your cell phone could run your car, or your house, or the industrial robots just by plugging it in. Build whatever kind of car you want out of modular parts for the wheels, power source, and body panels. If it doesn't suit your purposes, pop it apart and reconfigure it. But you mostly just use the mass transit because it's there, you're not in a hurry, you get to meet new people, and besides the subscription costs you ten cents a year and the service is better than a modern first-class airline seat.

The incoming stream of metals and oils for such a society would be pretty tiny as long as they weren't still using the oil as a power source. But with the nanotech required to achieve that level of modularity compact nuclear power plants would be relatively easy and there's enough of that kind of fuel running around to power their society until the sun burns out. Or they might use orbital solar plants, or even have built a Dyson Sphere to catch every bit of power available.

In short, as our tech level increases, our use of "non-renewable" resources becomes more and more efficient. So if you want a believable society which has full economic growth and minimal resource consumption, the correct way to go is forward, not backward. Although, to the visiting space alien it may look like we've gone backward. Since living is so cheap, expect people to spend a significant portion of their time on leisure activities and for there to be a major market in hand-made goods and services that might well appear to an outsider to comprise the entire economy.

Part of your plot could be that it's been this way for so many generations that they have actually forgotten how all the automated technology works and what it does for them, so they think they honestly can support their entire population on the output of just a few farms because everybody knows there's an endless supply of bland-but-filling nutrient paste...

Answer 7

For endless economic growth simply divorce your economy from physical reality, AKA invent a finance industry.

Finance is all about buying a nonphysical stake in a good in order to profit from the perceived value of the underlying goods. For example owning a stock in a physical company, or a bond for a government, or a contract on frozen orange juice futures. As the finance industry grows however, you go further and further down the rabbit hole farther away from the actual underlying physical goods and values, buying a nontangible piece of something that holds a stake of another immaterial product that is multiple steps away from any actual physical goods, like owning stock in a stock trading company with no physical assets. This literally gets to the point of creating paper value from nothing.

This works amazingly well in real life and I see no reason why this wouldn't work in your world under your listed constraints.