Authors: Yuval Noah Harari
Free-market capitalism has a firm answer. If economic growth demands that we loosen family bonds, encourage people to live away from their parents, and import carers from the other side of the world – so be it. This answer, however, involves an ethical judgement rather than a factual statement. No doubt, when some people specialise in software engineering while others spend their time taking care of the elderly, we can produce more software and give old people more professional care. Yet is economic growth
more important than family bonds? By daring to make such ethical judgements, free-market capitalism has crossed the border from the land of science to that of religion.
Most capitalists would probably dislike the title of religion, but as religions go, capitalism can at least hold its head high. Unlike other religions that promise us a pie in the sky, capitalism promises miracles here on earth – and sometimes even provides them. Much of the credit for overcoming famine and plague belongs to the ardent capitalist faith in growth. Capitalism even deserves some kudos for reducing human violence and increasing tolerance and cooperation. As the next chapter explains, there are additional factors at play here, but capitalism did make an important contribution to global harmony by encouraging people to stop viewing the economy as a zero-sum game, in which your profit is my loss, and instead see it as a win–win situation, in which your profit is also my profit. This has probably helped global harmony far more than centuries of Christian preaching about loving your neighbour and turning the other cheek.
From its belief in the supreme value of growth, capitalism deduces its number one commandment: thou shalt invest thy profits in increasing growth. For most of history princes and priests wasted their profits on flamboyant carnivals, sumptuous palaces and unnecessary wars. Alternatively, they put gold coins in an iron chest, sealed it and buried it in a dungeon. Today, devout capitalists use their profits to hire new employees, enlarge the factory or develop a new product.
If they don’t know how to do it themselves, they give their money to somebody who does, such as bankers and venture capitalists. The latter lend the money to various entrepreneurs. Farmers take loans to plant new wheat fields, contractors build new houses, energy corporations explore new oil fields, and arms factories develop new weapons. The profits from all these activities enable the entrepreneurs to repay the loans with interest. We now have not only more wheat, houses, oil and weapons – but
also more money, which the banks and funds can again lend. This wheel will never stop, at least not according to capitalism. We will never reach a moment when capitalism says: ‘That’s it. You have grown enough. You can now take it easy.’ If you want to know why the capitalist wheel is unlikely ever to stop, talk for an hour with a friend who has just earned $100,000 and wonders what to do with it.
‘The banks offer such low interest rates,’ he would complain. ‘I don’t want to put my money in a savings account that pays hardly 0.5 per cent a year. You can make perhaps 2 per cent in government bonds. My cousin Richie bought a flat in Seattle last year, and he has already made 20 per cent on his investment! Maybe I should go into real estate too; but everybody is saying there’s a new real-estate bubble. So what do you think about the stock exchange? A friend told me the best deal these days is to buy an ETF that follows emerging economies, like Brazil or China.’ As he stops for a moment to breathe, you ask, ‘Well, why not just be satisfied with your $100,000?’ He will explain to you better than I can why capitalism will never stop.
This lesson is hammered home even to children and teenagers through ubiquitous capitalist games. Premodern games such as chess assumed a stagnant economy. You begin a game of chess with sixteen pieces, and you never finish a game with more. In rare cases a pawn may be transformed into a queen, but you cannot produce new pawns, nor can you upgrade your knights into tanks. So chess players never have to think about investment. In contrast, many modern board games and computer games revolve around investment and growth.
Particularly telling are civilisation-style strategy games, such as
The Settlers of Catan
or Sid Meier’s
. The game may be set in the Middle Ages, in the Stone Age or in some imaginary fairy land, but the principles always remain the same – and they are always capitalist. Your aim is to establish a city, a kingdom or maybe an entire civilisation. You begin from a very modest base, perhaps just a village and its nearby fields. Your assets provide you
with an initial income of wheat, wood, iron or gold. You then have to invest this income wisely. You have to choose between unproductive but still necessary tools such as soldiers, and productive assets such as more villages, fields and mines. The winning strategy is usually to invest the barest minimum in non-productive essentials, while maximising your productive assets. Establishing additional villages means that next turn you will have a larger income that would enable you not only to buy more soldiers (if necessary), but simultaneously to increase your investment in production. Soon you could upgrade your villages to towns, build universities, harbours and factories, explore the seas and oceans, establish your civilisation and win the game.
The Ark Syndrome
Yet can the economy actually keep growing for ever? Won’t it eventually run out of resources – and grind to a halt? In order to ensure perpetual growth, we must somehow discover an inexhaustible store of resources.
One solution is to explore and conquer new lands and territories. For centuries, the growth of the European economy and the expansion of the capitalist system indeed relied heavily on overseas imperial conquests. However, there are only so many islands and continents on earth. Some entrepreneurs hope eventually to explore and conquer new planets and even galaxies, but in the meantime, the modern economy has had to find a better method of expanding.
Science has provided modernity with the alternative. The fox economy cannot grow, because foxes don’t know how to produce more rabbits. The rabbit economy stagnates, because rabbits cannot make the grass grow faster. But the human economy can grow because humans can discover new materials and sources of energy.
The traditional view of the world as a pie of a fixed size presupposes there are only two kinds of resources in the world:
raw materials and energy. But in truth, there are three kinds of resources: raw materials, energy and knowledge. Raw materials and energy are exhaustible – the more you use, the less you have. Knowledge, in contrast, is a growing resource – the more you use, the more you have. Indeed, when you increase your stock of knowledge, it can give you more raw materials and energy as well. If I invest $100 million searching for oil in Alaska and I find it, then I now have more oil, but my grandchildren will have less of it. In contrast, if I invest $100 million researching solar energy, and I find a new and more efficient way of harnessing it, then both I and my grandchildren will have more energy.
For thousands of years, the scientific road to growth was blocked because people believed that holy scriptures and ancient traditions already contained all the important knowledge the world had to offer. A corporation that believed all the oil fields in the world had already been discovered would not waste time and money searching for oil. Similarly, a human culture that believed it already knew everything worth knowing would not bother searching for new knowledge. This was the position of most premodern human civilisations. However, the Scientific Revolution freed humankind from this conviction. The greatest scientific discovery was the discovery of ignorance. Once humans realised how little they knew about the world, they suddenly had a very good reason to seek new knowledge, which opened up the scientific road to progress.
With each passing generation, science helped discover fresh sources of energy, new kinds of raw material, better machinery and novel production methods. Consequently, in 2016 humankind commands far more energy and raw materials than ever before, and production skyrockets. Inventions such as the steam engine, the internal combustion engine and the computer have created whole new industries from scratch. As we look twenty years to the future, we confidently expect to produce and consume far more in 2036 than we do today. We trust nanotechnology, genetic engineering and artificial intelligence to revolutionise production
yet again, and to open whole new sections in our ever-expanding supermarkets.
We therefore have a good chance of overcoming the problem of resource scarcity. The real nemesis of the modern economy is ecological collapse. Both scientific progress and economic growth take place within a brittle biosphere, and as they gather steam, so the shock waves destabilise the ecology. In order to provide every person in the world with the same standard of living as affluent Americans, we would need a few more planets – but we only have this one. If progress and growth do end up destroying the ecosystem, the cost will be dear not merely to vampires, foxes and rabbits, but also to Sapiens. An ecological meltdown will cause economic ruin, political turmoil, a fall in human standards of living, and it might threaten the very existence of human civilisation.
We could lessen the danger by slowing down the pace of progress and growth. If this year investors expect to get a 6 per cent return on their portfolios, in ten years they will be satisfied with a 3 per cent return, in twenty years only 1 per cent, and in thirty years the economy will stop growing and we’ll be happy with what we’ve already got. Yet the creed of growth firmly objects to such a heretical idea. Instead, it suggests we should run even faster. If our discoveries destabilise the ecosystem and threaten humanity, then we should discover something to protect ourselves. If the ozone layer dwindles and exposes us to skin cancer, we should invent better sunscreen and better cancer treatments, thereby also promoting the growth of new sunscreen factories and cancer centres. If all the new industries pollute the atmosphere and the oceans, causing global warming and mass extinctions, then we should build for ourselves virtual worlds and hi-tech sanctuaries that will provide us with all the good things in life even if the planet is as hot, dreary and polluted as hell.
Beijing has already become so polluted that people avoid the outdoors, and wealthy Chinese pay thousands of dollars for indoor air-purifying systems. The super-rich build protective contraptions
even over their yards. In 2013 the International School of Beijing, which caters for the children of foreign diplomats and upper-class Chinese, went a step further, and constructed a giant $5 million dome over its six tennis courts and its playing fields. Other schools are following suit, and the Chinese air-purification market is booming. Of course most Beijing residents cannot afford such luxuries in their homes, nor can they afford to send their kids to the International School.
Humankind finds itself locked into a double race. On the one hand, we feel compelled to speed up the pace of scientific progress and economic growth. A billion Chinese and a billion Indians want to live like middle-class Americans, and they see no reason why they should put their dreams on hold when the Americans are unwilling to give up their SUVs and shopping malls. On the other hand, we must stay at least one step ahead of ecological Armageddon. Managing this double race becomes more difficult by the year, because every stride that brings the Delhi slum-dwellers closer to the American Dream also brings the planet closer to the brink.
The good news is that for hundreds of years humankind has enjoyed a growing economy without falling prey to ecological meltdown. Many other species have perished in the process, and humans too have faced a number of economic crises and ecological disasters, but so far we have always managed to pull through. Yet future success is not guaranteed by some law of nature. Who knows if science will always be able to simultaneously save the economy from freezing and the ecology from boiling. And since the pace just keeps accelerating, the margins for error keep narrowing. If previously it was enough to invent something amazing once a century, today we need to come up with a miracle every two years.
We should also be concerned that an ecological apocalypse might have different consequences for different human castes. There is no justice in history. When disaster strikes, the poor almost always suffer far more than the rich, even if the rich caused the tragedy in the first place. Global warming is already affecting the lives of poor people in arid African countries more than the lives of affluent
Westerners. Paradoxically, the very power of science may increase the danger, because it makes the rich complacent.
Consider greenhouse gas emissions. Most scholars and an increasing number of politicians recognise the reality of global warming and the magnitude of the danger. Yet this recognition has so far failed to change our actual behaviour. We talk a lot about global warming, but in practice humankind is unwilling to make serious economic, social or political sacrifices to stop the catastrophe. Between 2000 and 2010 emissions didn’t decrease at all. On the contrary, they increased at an annual rate of 2.2 per cent, compared with an annual increase rate of 1.3 per cent between 1970 and 2000.
The 1997 Kyoto protocol on reduction of greenhouse gas emissions aimed merely to slow down global warming rather than stop it, yet the world’s number one polluter – the United States – refused to ratify it, and has made no attempt to significantly reduce its emissions, for fear of slowing down its economic growth.