Book Review: “The End of Growth” by Jeff Rubin

The former high level economist with CIBC Jeff Rubin‘s book “The End of Growth” approaches contemporary political and environmental issues from an economic perspective, focussing on the impact that rising energy costs has on the ability of various economies to sustain historical rates of growth. While accepting the basic tenants of anthropogenic climate change, Rubin rejects the political idealism of those who think we can respond to the threat of global warming by agreements and collective action. Rather, he believes that rising energy costs will spell the end of global economic growth, and as a result will be the reason humans do not burn enough fossilized carbon to cause disastrous levels of climate change.

“The End of Growth” is divided into two parts; roughly speaking, the first half makes the case that the era of cheap oil is ending and what this means for economic growth, while the second half projects the implications of the end of growth for developed economies and for the climate. The argument for the end of cheap oil comes down to the emergence of the developing world onto the scene of big consumers of global oil production – as China and India can purchase more oil on the global market, they are competing for the same productive capacity which, in the past, the developed nations purchased at lower prices. The competition drives up prices which, in turn, drives up supply, but only because the higher prices makes previously economical oil resources into profitable oil reserves. The future is therefore projected as one of developed and developing economies competing over oil, which Rubin argues is a key driver of economic growth, using the proceeds from that economic growth.

In this competition, Rubin projects developing economies to do better because they have not constructed their societies on the basis of cheap oil – and therefore rising oil prices will have much less of an impact on the capacity of those economies to purchase increasing amounts of oil into the future. Basically, when the cost of oil goes up, the average person in the U.S.A. will probably consume less energy. Whereas in China, the much higher rates of economic growth, and the fact thousands are buying not new cars to replace old ones but cars for the first time, increasing energy prices will tend to correlate with increasing energy consumption. This is counter intuitive only because we don’t think of energy as a driver of economic growth. If we do, if we think the reason energy prices are increasing is because energy is increasingly a source of productive effort, i.e. a source of wealth, then it wouldn’t be surprising if your wages were going up faster than the cost of energy, and therefore energy costs relative to your ability to pay would actually be decreasing.

In the last few chapters, after having argued that we should not expect the developed world to continue its past rates of economic growth, Rubin attempts to make the case that this end of growth will not necessarily be “all that bad” (to quote the book’s subtitle), has a more difficult task in hand:  sell the reality of the neo-liberal economy as something desirable, and postulate global recession as the messianic saviour of humanity in the face of the seemingly unstoppable drive to catastrophic climate change.

Rubin’s conception of a “static economy” hardly paints a rosy picture of the future for developed western economies. He speaks about present trends which he expects to continue: the aging workforce (his example is senior citizens working at Avis rentacar), increasing unemployment among the young and educated, children living at home for longer, and decreasing levels of public services as taxpayers are not willing to pay. Privatization is the new reality according to Rubin not because privatization is more efficient, only because employees in the private sector are paid less. Rubin’s honesty about the reality of living in static economy is refreshing, and if the contracting effects were felt equally across our population, he might even be persuasive. However, the term that is missing from the book is “inequality” (the word doesn’t appear in the index, nor did a search of the book’s preview in Google Books yield a single instance of the term). Rubin refers to the concept of economic class when talking about Bahrain, and when discussing India and China, but he has no class analysis of North America – there is no sense that the middle and working class are being squeezed, there is another class which is maintaining a very steady, or even increasing rate of increase of its wealth. In essence, what is missing from the book is an account of the 1% their role in the political response to increasing energy costs. 

The final chapter of “The End of Growth” is devoted to the most macroscopic political question of our times: climate change, and the question of the survival of the human species. Rubin accepts the science of anthropogenic climate change, but rejects political attempts to confront it by collectively agreeing to emit less carbon. Instead, he suggests that increasing oil crisis will sooner or later cause a global recession which will be the real cause of reducing carbon emissions, and will also cause many carbon resources which the IPCC currently projects will be burned, to not be burned. Expensive oil and coal, after all, will only be extracted if it is economically profitable to do so – and a global recession will mean that energy prices do not continue to rise indefinitely.

Rubin’s callous attitude towards those attempting to respond to climate change with politics is the clearest example of his chicago-school style economist’s bias: the belief that the economy is the fundamental driver of social and political change, and the privileging of non-economic sources of change. It causes one to go back and question the fundamental assumption of the book: is oil really the only driver behind economic growth? Is it not possible to have growth in an economy where oil use, or even energy use overall, is declining? Rubin might do well to look at the example of Cuba: the fall of the Soviet Union cut Cuba off from its traditional oil supply and forced a complete transformation of the economy. The Cuban economy shrank from 1990 to 1994, but has grown every year since 1994 including several years with growth over 10%. This despite the fact that Cuban energy consumption per capita remained virtually constant between 1993 and 2014 according to public data.

It is refreshing to see an increasing interest in levels of political analysis that go beyond merely looking at political leaders and their decisions. Focussing on the interaction of politics and the economy, or what used to be called “Political Economy”, is a welcome antidote to political accounts which ignore the power of capital, and the importance of conflicts over strategic resources. More specifically, it is welcome to see analysts focussing on the role of energy resources as key motivators of economic growth. In an important sense, fuel is petrified work, and our ability to control it means that our economies are able to harness far more labour than can be provided by the workers. This isn’t Rubin’s analysis (he mainly focusses on the relation between increased energy consumption and economic growth as measured by economists), but it isn’t antithetical to his analysis either. It would be interesting to compare Rubin’s book to other recent works on the intersection of energy and politics such as Timothy Mitchell’s Carbon Democracy.

Addendum:

A good portion of Rubin’s book is devoted to the politics of the Arab world, including a chapter entitled “Arab Revolts”. This was not mentioned in this review, however, because these sections of the book are exceedingly boring, sometimes racist, and certainly the least interesting part of the book. For the most part, Rubin simply argues that revolutions in oil producing states tends to decrease the amount of oil they produce, and therefore we should not look to them as sources of solutions to our problem of not enough daily global oil production. In an effective admission of extreme racism, at one point he actually says that Arabs are unlikely to turn to democracy in these revolts, because the “only democracy” in this region is Israel, and Arabs are unlikely to “look at the Jewish state” as their role model.

The one interesting insight from this chapter is Rubin’s analysis of Saudi oil production in relation to the global recession of 2008: when Bush went to the Saudis to ask for an increase in oil production, they managed an increase much smaller than they claim to be capable of. This is interesting according to Rubin because a global recession was not in the Saudi’s interest, and if they had increased production as much as they claim to be capable, they might have helped avert one. This suggests that the Saudi oil fields are already producing basically at capacity, and the implication of this is to reinforce his argument that the supplies of cheaply accessible oil are dwindling quickly, perhaps more quickly than official predictions suggest.

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