RESEARCH AND ANALYSIS

The WTO by 2022 — ceteris paribus?

Helmut Lubbers, MSocSc BE DiplEcol

 
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Scenarios and visions are normally based on (1) a knowledge base that is thought to be correct, (2) a cluster of developments that are thought to be probable and/or desirable, and (3) the “ceteris paribus” assumption.

Whilst the knowledge base is necessarily incomplete and the proposed developments are an expression of one’s worldview and personal background, the “all-other-things-equal” condition is mostly unrecognized.

Many visions are questionable and some are highly improbable because basic other things (ceteris) will, or will not, remain the same (paribus).

Trade, population, and world GDP projections are mostly an extrapolation of past trends, assuming resource availabilities and governance will not change dramatically.

So-called “challenges” such as looming food, water, and fossil energy shortages, will have to be addressed by innovation and technology, many opinion leaders say.

Environmental problems such as climate change, biodiversity loss, overfishing, pollution, deforestation “must” be met within the current paradigm of so-called “free trade” and economic liberties, they say. Regulation and restrictions are pictured as barriers to trade and hampering growth and progress.

The “raison d’être” of the WTO, its rationale, is the promotion of trade in order to achieve economic growth, create jobs, and reduce poverty.

These goals, however, are in direct conflict with the premises for human life and the short-term survival of the human species. They reflect a pattern of wishful thinking, of unwarranted expectations that “technology” will somehow save us.

The growth and trade practices and policies show important, factual discrepancies when examined on their ceteris paribus validity.

Hereafter a choice of circumstances that remain equal, and others that are changing, are discussed with a view to the viability of the WTO by 2022.

Things that remain the same are, for example:

1. The finiteness of the planet and its resources is beyond doubt.

2. It is impossible to recreate resources that have been depleted, neither by Hope, nor by Optimism, nor by Technology or so-called “innovation”. Future, hoped-for technology cannot be used to solve today’s problems. Today’s technology does not, for example, allow the same industrial and agricultural production as when using electricity. Electric power generation plants and distribution systems are themselves 100 per cent dependent on fossil fuels for its manufacturing and maintenance. Solar power, wind power and hydraulic dams do therefore not produce so-called “renewable energies”. Tomorrow’s technology remains unknown and unusable today.

3. The materiality of human society, that is the impossibility to dematerialize the GDP and GDP growth, is another unchanging fact. Economists suggest that increased material efficiencies could compensate for the increased material depletion rates caused by economic growth. Their so-called “decoupling” is an artifact, because growth refers to the number of products made, whereas increased efficiency reduces the material used per product unit. A higher material efficiency in one year does in fact reduce the GDP the next year for the same quantity of that particular product. Rebound effects do not invalidate this. The argument that miniaturization would allow future growth, whilst reducing resource use impacts today, violates the condition that the same time period and place must be compared. So, in other words, a higher GDP output requires higher energy and material inputs, always.

4. A basic sustainability condition is that a resource must not be consumed faster than nature can regenerate it within a reasonable, human time frame. The Brundtland definition’s equality of the environment, society, and the economy is ruefully wrong. Without environment, no society and its embedded economy are possible. We are depleting nonrenewable resources many times faster than nature could ever replenish.

5. A constant fact is that we depend on a sound environment and intact ecosystems for our life and survival. The so-called “internalization of externalities”, i.e. the attempt to include environmental degradation as “costs” in the prices, does not nullify the fact that the consumption of resources in most cases means their irrevocable depletion. The “equivalent valuation” of externalities remains a pie in the sky, because nature cannot be monetarized, and its loss even less.

6. More food for more people requires more resource inputs and more plant nutrients. Even if genetically engineered plants could continuously produce higher crop outputs, to cope with the rising world population, these crops would require more nutrient inputs. Fertilizers and soil fertility are diminishing resources, non-renewable like most other resources, and dependent on modern infrastructures and fossil fuels. So producing sufficient food for growing populations is impossible.

Things that do not remain the same are, for instance:

7. The easy availability of fossil fuels, minerals, fresh water, soil fertility, and a “normal” climate will change. The world’s stocks of fossil fuels, minerals, potable water, and fertile soils are declining in line with population and economic growth. The adverse effects of climate change are increasingly noticeable.

8. The Energy Returned On Energy Invested for fossil fuel extraction and other mining activities is changing. Once a barrel of oil takes more energy and technology for its extraction than the net energy of this barrel of oil, extraction will become senseless. A hundred years ago EROEI was around 100:1. Presently it is estimated at approx. 20:1. Some specialists claim that an EROEI of 5:1 is the break-even point, i.e. the minimum required for the maintenance of existing societal structures, below which point GDP growth becomes impossible.

Combining diminishing resource availabilities with growing populations and economies can lead to only one conclusion: the material wellbeing per capita is constantly diminishing. More people having less space, less food, and fewer goods, on a world average.

Increasing scarcities and resource depletion means that projections such as “9 billion people by 2050”, or “the 21st century” are illusionary. It is quite possible that population growth will stop at 8 billion and a population reduction (die-off) will then start, because of oil, food, and water scarcities and the effects of climate change.

The finiteness of resources and the impossibility to recreate depleted stocks and to revive extinct species by technology means that our growth policy equates to planned suicide for humanity.

If “poverty” reduction is an honest goal, one must consider redistribution. Because no country can support further economic growth and most countries are horrendously overloading their resource base. An x dollar per day assumed poverty line neglects the importance of non-monetized means of living and well-being.

The “jobs” argument is reversed logic, which cements our suicidal growth ideology. We cannot continue to create jobs to generate money to buy stuff that depletes the world. We must produce the stuff that we really need and that the planet can supply sustainably.

The cheap energy era allowed for the window dressing of jobs of little purpose or benefit, sometimes even value destroying. A return to a real base economy means the non-added value jobs disappear along with the lifestyle and community facades.

The present peak oil era will unavoidably finish, probably before the end of this decade. Peak natural gas is not far off. Shale oil, shale gas, and coal can only delay the start of the post-peak oil downslope insignificantly.

As modern life depends on oil and natural gas, the Post Peak Oil Downslope will sound the death bell for modern industry, industrial agriculture and globalization. International trade will grind to a halt for lack of resources and fuels.

The downward resource spiral will probably lead to an increasing spiral of conflicts and wars over diminishing resources.

In its wake nuclear power plants, waste disposal sites, and atomic war stocks could become unsupervised. This may lead to radioactive leakage and worldwide radioactive contamination, potentially afflicting all life forms on earth.

Therefore the WTO will — ceteris paribus — probably not survive 2022, i.e. the year in which the present peak oil era will most probably have finished.

The trade functionaries may then have gone home, trying to facilitate survival for their loved ones.

One final note to commentators: Kindly try to distinguish between hope, optimism and reality. Frequently the last resort of critique boils down to “You’re a pessimist!” or “Mankind has always found a solution!” Should that be your reaction, then consider going back to the points one and two of the above.

References:

“Overshoot” by William R Catton Jnr. (excerpts)

Scenarios (links and graphs)

Peak oil: (IEA World Energy Outlook)

Ceteris Paribus