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On Growth (1974)

On Growth

(1974)–Willem Oltmans–rechtenstatus Auteursrechtelijk beschermd

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46. Herman Kahn

Dr. Herman Kahn is director of the Hudson Institute at Croton-on-Hudson in New York.
He was born in Bayonne, New Jersey, in 1922. He studied at the University of California at Los Angeles, where he followed classes by Nobel Prize winning Linus Pauling.1
In 1945 Kahn joined the Douglas Aircraft Corporation. In 1947 he went to the Rand Corporation in Santa Monica, California, where from 1948 to 1961 he was on the staff of military intelligence. In 1961 he founded his own think tank, the Hudson Institute.
His most important books are On Thermonuclear War (1960), Thinking about the Unthinkable (1962), The Year 2000 (1967), Can We Win in Vietnam? (1968) and Why Antiballistic Missiles? (1969). In 1972 he published with historian B. Bruce-Briggs Things to Come: Thinking about the Seventies and Eighties.

Victor Hugo once said that nothing is more powerful than an idea whose time has come. Do you feel Limits to Growth is one such idea?

 

It's an idea whose time has come in perhaps three different ways. First, man's impact on the environment is now very significant and very widespread, and therefore, we must increasingly incorporate the costs of environmental damage and of preserving the environment in our calculations.

Second, it may be important to start asking the question ‘What are we doing today that will be helpful to our grandchildren or our great-grandchildren, or even further along?’ These generations are unrepresented in most calculations and decisions in the political and economic process. There is almost nothing in the price system which discounts more than ten or twenty years ahead. Most governments do not look ahead much more than five years, in spite of what they may say or claim. Individuals often do plan ahead for their family twenty, thirty, or more years, but in terms of our society as a whole, nobody's worrying specifi-

cally about the grandchildren or great-grandchildren. Actually, we do not know if, in practice as opposed to theory, it is necessary to discount much more than ten to twenty years ahead. But the possibility of this necessity is becoming increasingly clear.

Finally, limits to growth is an idea which fits into the ideology of upper middle class intellectuals more or less worldwide, but particularly in what we call the Atlantic Protestant culture area, and therefore it has become a very influential idea. Actually limits to growth type of thinking in some ways derives from a more fundamental problem. One can quote Nietzsche: ‘Inescapably, unhesitatingly, terrible like fate, the great task and question approaches: How should the earth as a whole be administered? To what end should man - no longer a people or a race - be raised and bred?’ My own belief is that the answer will include a concept which is common to almost all Asian religions, the concept of ‘Many mountains up to heaven, many roads up each mountain.’ In particular this concept would include what we at Hudson call a mosaic culture, in which many different individual and group answers to Nietzsche's question exist fairly comfortably side by side. When I say many mountains up to heaven, I mean by ‘heaven’ a post-industrial culture. This post-industrial culture probably will largely have emerged in the next 50 to 100 years in most of the OECD countries.

 

What culture?

 

Post-industrial culture. The major characteristic of the post-industrial society can be seen by analogy with the U.S. today, which is a post-agricultural society. The U.S. produces a great many agricultural goods, and in that sense, is what we would call a super-agricultural society, but less than four percent of the work force produces more than ninety-five percent of the food and products we need. In the same way, we think of this post-industrial economy as a super-industrial economy in the sense that it produces a fantastic amount and variety of goods, but only a small percentage of the people are needed to carry through this production. There will be plenty of raw materials, pollution will be managed, and a very high standard of material consumption for everybody will become possible. This concept of a post-industrial economy and eventually a post-industrial culture for society is the exact opposite of that of the Club of Rome, which argues extreme and absolute limits to consumption.

Before I attempt to support my position, let me first stress some areas of agreement with the Club of Rome.

First it is important to ask about the impact of current policies on the lives of our children, grandchildren and great-grandchildren. It is also important to realize that there are uncertainties in such calculations. If there is no obviously safe policy, one will not pay a great cost today for very uncertain gains in the future, particularly when policies entailing such costs may turn out to be counterproductive for the grandchildren and great-grandchildren. The burden of proof for anybody who is arguing for the acceptance of great costs today in the name of the long-term future is on the advocate of such costs. But none of this detracts from the fact that concern for the grandchildren and great-grandchildren has been found increasingly legitimate.

The second thing so strongly expressed by the Club of Rome studies is the observation that there is no such thing in nature as an exponential growth curve that continues indefinitely. Almost all curves in nature start out slowly, increase rapidly, build to an inflection point, then turn over or taper off. The issue is when do they turn over and why. According to the Club of Rome, this turning over would be due to starvation, pollution, and resource limitations. I believe the turnover will occur because of prosperity and changes of values. When people have just about as much as they want, they will not be willing to sacrifice leisure or other things for more production. We are currently doing a study at Hudson Institute on what we call the Prospects for Mankind. We argue that the world population is likely to taper off around 15 billion plus or minus a factor of two, and gross world product at about 300 billion plus or minus a factor of three. Current gross world product in 1973 will be about four trillion dollars, and I believe that the Club of Rome has argued that even this level cannot be maintained indefinitely, or at least not much above this level. We hope to put about 20 to 50 man years into this study, at the Hudson Institute, and to date, we have put in between one and two, thus we have completed less than five percent of what we hope and expect to do. Within that five pecent or less, we have already changed our mind a great deal about the nature of the problem and what one can say with confidence. In fact, I don't believe we will make as many changes in the rest of the study as we have already done in these first months. Not because we have become rigid, but because I think we have a fairly good outline of what the study will produce in some areas and in other areas we don't have any outline at all, so we cannot change our mind.

Where did we change our minds? We had thought we would have to assume very great improvements in technology, or at least a natural

growth of technology as well as a rather high level of competent management both worldwide and locally in order to deal with all the problems. We now believe that we can deal with most or all of the problems that are coming up with current or near current technology. This means that since future technology should be better, it should be even easier to deal with our problems. While we don't know how high a level of management it will take to deal with all of the problems, we now believe that most of the problems can be dealt with by only a medium level of competency and skill and that while there must be many international rules and regulations, these probably do not require competent, powerful world government. We are not saying this is true of all the problems, but we are saying this is true of many of the problems which we are beginning to study.

There is another way in which I would agree with the Club of Rome, but this agreement is also a disagreement. The Club of Rome talks about the present predicament of mankind. I would say they are completely correct because the problem exists; but then the Club of Rome argues that the problem will go on for 100 to 150 years.

Back in June 1955 John von Neumann wrote an article in Fortune magazine on the prospects for mankind. I believe it to be an extraordinarily intelligent article, and for years we handed out copies of it at almost every meeting in which these kinds of issues came up. This article points out that by the year 2000 there will be great necessity for what we call zoning ordinances. These are regulations to control or correct pollution, over-crowding, land use, ocean use and so on. Generally, we believe that if one looks at gross world product in historical terms, and that if we could hit the highest rate that has ever been reached or will be reached in the next decade or two, a rate of about six percent, this takes us to an inflection point on the curve of gross world product. We believe, and not completely coincidentally, that what we call the 1985 technological crisis will occur at about the same time, and this is exactly the crisis that von Neumann was talking about. It is fairly impressive that he picked the 80's as the date back in 1955, and nothing has happened since then, as far as I am concerned, to cause the date to change. In other words, we are arguing that in the next decade or two a big hunk of man's problems will occur and if we get through this period, we will still have many problems to solve, but they ought to be relatively easy to deal with on the whole, at least as compared to the big hunk of the 70's, and 80's, and perhaps the 90's. These problems go all the way from the current highly advertised ‘energy crisis’ to the problems of arms

control, new weapons, how to deal with genetic control and all kinds of new drugs, and the like. How to deal, say, with cloning when it becomes feasible would be one example of the critical decisions technological advancement is going to present in the next couple of decades.

 

Cloning?

 

Yes, cloning. All these things are coming up together. We don't believe that they will be such big problems fifty to a hundred years from now. We rather suspect that the backbone of these problems will be broken by the year 2000. We will always have problems with us. There's never a situation without problems. But hopefully, the problems will not be getting exponentially worse. From the year 2000 onwards, many of the current problems should be pretty much settled, though, of course, brand new problems will arise.

 

A form of equilibrium?

 

Yes. The Club of Rome, which thinks the real crunch will come fifty or a hundred years from now, is in a way being very optimistic. Problems of the next ten to twenty years are of vital importance. On the other hand, the Club is very pessimistic because it says we'll have a brick wall there, and there's no way to get around it. That seems to be dead wrong! And what do I mean by dead wrong? Here I have to be very careful. What is the position of the Club of Rome? Resources are running out. Pollution and other devastating byproducts are almost certain to get out of control. There are disastrously increasing gaps, both domestic and external, between the rich and the poor. Policy-making is becoming increasingly difficult, perhaps disastrously so. Industrialization and technology and affluence are all traps. We're taking a different position on the basis of our current study. Almost everybody is getting rich, some faster than others.

 

May I interrupt here? The adviser of President Nixon, on food, has said, seven hundred million poor Chinese is a problem, but seven hundred million rich Chinese will wreck China in no time. Aren't we talking only of our part of the world?

 

No, no, almost everybody is getting rich, some faster than others.

Among those getting rich faster than others will be the Chinese. I think the last people to get rich will probably be the Indians and maybe parts of Black Africa and some of the Moslem countries. I am willing to bet five to one that the Chinese will get rich quite rapidly.

 

Could you imagine two cars in Chinese garages per family?

 

I could, but I don't think that will be the answer they choose. If they do, there'll be big traffic jams - at least for a time.

 

Does this planet carry enough natural resources to make those automobiles that would be needed in China?

 

I can find the necessary resources for you today and I don't need any improvement in technology to do so. It would be necessary to do some redesigning and to make some substitutions. You might use a lot more aluminum, a lot more iron and a lot less of some alloys. In the future, we shall probably find more alloys or superior substitutes, but if we depend only on currently known substances, one has to make a large number of substitutions. If properly managed, there will be plenty of resources for a wealthy China, including resources for pollution suppression and pollution absorption. There are two ways to demonstrate this proposition. One is to use what we call the use-expanding model. Basically, the proper model of a resource is not of a fixed bowl or a fixed pie. We should think of resources as a process, like a muscle or a skill. Within rather large limits, the more you use the more there is. In the fixed bowl or fixed pie model what I use, I take away from you, what you use you take away from me. In the skill or process model we don't have to fight over a fixed pie. If the fixed pie model were correct the world would be in very bad shape: World peace would not be possible. The rich and powerful would seize the resources and hold them and keep down the poor. Almost no other result would be practically conceivable.

 

Would that also be true within nations, for example, Cuba?

 

Yes, but Cuba is an authoritarian society. Incidentally, Castro's redistribution was also at the expense of the workers. Cuba is very interesting in this respect. I don't know whether Castro is good or bad for Cuba. History will judge. But he is bad for the short and medium term growth of Cuba. Their GNP now is about the same as when Batista was there.

But you did write that the poorest people have a better life and more government services under Castro than they had under Batista?

 

This seems to be correct. Every little village has a sewing machine, has a school, feels itself to be part of the system. Few now feel left out of the system completely. But the plantation workers and many others in Cuba are working harder and for less money. They are angry.

 

But on the global scale, wouldn't the rich nations have to come down like the rich classes in Cuba, and wouldn't the poor countries like Latin America, Africa and Asia have to be pulled up at the expense of the rich nations? It would get us angry, and we would indeed have less, in order to get a more equal distribution of wealth?

 

I would be perfectly willing myself to be part of such a solution, if it were the only way to make the poor rich. I would be willing to see my own salary drop quite a bit, but perhaps not to the extent it would have to drop. I could imagine an egalitarian system today, and I find that I myself am much more willing to do this than almost anybody I know. My own belief is that it is inconceivable as a practical matter to imagine the rich countries depriving themselves of most of their income to help the poor. The rich are strong and the poor are not. This condition is not likely to change significantly over the next three or four decades.

 

The status quo will be maintained?

 

No, I think that many of the poor will get very rich and get powerful too. The status quo will not be maintained. It will not be maintained because the poor will get rich. Not because the rich voluntarily get poor. You see, that's a very different statement.

 

Everybody will get rich?

 

Eventually, except for the hard-core poor. Some will do it in two or three decades and some will take five or six, and some will take ten or fifteen. This is not a prediction. This is an extrapolation, a projection. This is a scenario. But a scenario which I feel has a high degree of validity. Let me go back to the big shock of our study: We said to ourselves, if we really have serious problems in getting rich, we should

be able to find solutions. We tried to find such problems. We failed to find any unsolvable problems. I'm overstating right now. Now I want to make the correction. What we expected to happen was that we were going to find different kinds of problems. We have learned in the past that if we are dealing with a big system model, it is very important to focus the attention on the important interactions. That is, it is almost useless to use a model which treats each interaction with equal intensity. It would just be too big to handle and you would fail to get any information out of it. What we said was, let us first try to find those problems which by themselves or with interactions look very important, and then see if we can imagine the kind of technology which it would take to fix it, or the kind of change in the system which ameliorates or eliminates the problem. Let me go over the list of problems which the neo-Malthusians have said we have. First: that we will run out of resources. But it is not that we have no more coal to burn because coal is running out, but that we will have only high sulphur coal left to burn. That's not a simple running out, that's a pollution problem. We don't want to burn it because of the high degree of sulphur. We looked at the major raw material type resources and came upon none that looked disastrous; we even looked at more subtle resources like chromium, and we can find none there either that looks disastrous. (Throughout, we should remember, this holds only if we expect middle class, not upper class, standards of living.) Therefore I have given many members of the Club of Rome and others, a standard challenge. If there are critical resource limitations, what are they? In almost all cases I have studied they can be dealt with by current and near-current technology.

But what about the second problem - if the resources are not really usable because of side effects such as those that occur when burning high sulphur coal? Here the situation is more complicated. We don't even know what all these side effect type problems will be. But as far as current problems are concerned, and the ones which people worry most about in the long run, they seem perfectly amenable to simple technological solutions - if there are enough resources to use these technological solutions, that is if we have enough wealth. In fact one of the most important justifications for economic growth is that it provides the resources we need to deal with these problems.

The third issue that the neo-Malthusians focused on is what they call disastrously increasing income gaps. It is true that there are some fixed resources. The distribution of these resources is decided both by the rich and the poor, depending basically on what the rich will be able

to get away from the poor. The richer they are, the more they will be able to get away. Such situations occur very rarely and we usually find that the richer the rich get the richer the poor get, because it is the very riches of the rich that create technologies and open up opportunities for the poor.

 

But what about the political problem? The resentment of the poor will become disastrous.

 

In most cases we feel that this concept of resentment about poverty is a concept that develops within a particular social or economic group, and rarely has much applicability across groups, even if they are intimately in contact with each other. If you polled almost any peasant or worker, or most businessmen in Latin America, in Africa, and in Asia, you would find they don't care whether the gaps are bigger or smaller. They want to get richer, that's all. And if the fastest way to get richer is by bigger gaps, fine. If the fastest way to get richer is by smaller gaps, fine. In practice the easiest and fastest way for the poor to get richer is by exploiting bigger gaps. So that's what they want. The emphasis on gaps as a problem is widespread in certain circles, but in most cases it is perceived as a problem by the rich, not by the poor.

Let us move on to the fourth point - that policy-making is increasingly difficult, perhaps disastrously so. There is no question, in my judgment, that policy-making is going down in quality, so that we do not deal with problems as well today as we did twenty years ago. Policy-making is worse today. If it gets much worse, I think it would be disastrous. What makes it worse is as much a decrease in the quality of the discussion as an increase in the difficulty of the problems. If you can get rid of some of the low-quality discussion, I think that the policy-making might be adequate.

 

Why do you think economists are so critical of the Club of Rome?

 

Partly because they are professionals in this kind of issue and really understand it - and also understand from experience the weakness of the input-output model used by the Club of Rome - partly because they have their own educated incapacities and think the price-system and market will always work and do not understand that there are some new elements to this situation.

Their capacities could be parochial, could be a little outdated.

 

I would put it this way. I will agree with eighty to ninety percent of the typical position of the economists who reject the Club of Rome. I do think that many don't fully understand the possible impact of even quasi-exponential growth or of some of the new problems and issues which are coming up.

 

Do you feel that a beginning has been made to pool experience, talent and wisdom in this field to aim at the future with the aid of computers in order to think of these children and grandchildren, to make the world livable fifty years from now?

 

I think you've put one phrase there which annoys me very much: ‘with the aid of computers.’ In the late forties and early fifties the United States had at one time about eight high speed computers; all of them were working for me. I have done lots of computer problems in my life. I enjoy computers. I have yet to find a problem of this sort in which computerized studies are very useful. I find that usually those who most use computerized studies understand this the least. It is very interesting to me that we have never used computers at Hudson for any other than tactical exercises and engineering studies. You don't need computers for most serious policy problems or even systems analysis.

We have been aware for many years of the ga-ga problem: garbage-in, garbage-out. We now call it the ga-go problem: garbage-in, gospel-out. The most interesting aspect about this whole matter is that many people worldwide have been distrustful of the use of computers for complicated problems. And all of a sudden there comes an answer to problems which they like, and now they say the computer is good. Why? Because they like the answer. If they didn't like the answer, they would have said, ‘Who believes it, it comes from a computer.’

 

But who likes the answer that the world is in danger of being wrecked in twenty years?

 

Many in the upper-middle classes everywhere - or almost everywhere. That's why this is a class-interest issue. At the age of fifty I have become a Marxist. I now ask myself, ‘Look at the class interest. Look at the class attitudes. Who profits?’ All right. Who is it who gets hurt the most by growth? What class is concerned?

The working class.

 

No. The working class does well by growth. It does well!

 

Not if growth runs amok.

 

The working class is the last to be hurt. The things that happen first in growth that people don't like are overcrowding, too many cars, urbanization. The working class likes that.

 

But how about increasing unemployment, labor unrest?

 

But growth has, by and large, not caused an increase in unemployment. Show me one country where an increase in growth has caused massive unemployment. The big unemployment in the world is in the undeveloped world, not the developed world.

 

In Europe at the moment we have them.

 

You have recessions, yes. You always have recessions. Okay. If you tell me that a modern dynamic economy has recessions, absolutely. You will have cycles. Many workers understand that, and will accept it. As long as he does well on the average. The big unemployment of the world is in the underdeveloped world. Let's remember that.

 

In your view McNamara was right in Stockholm when he said we need economic growth in order to help fight poverty in the Third World.

 

Absolutely. You need economic growth because the mass of people are poor.

Let me talk a little bit about what we call the Paneqole program. Paneqole is an acronym for peace, affluence, national and ethnic identity and freedom, quality of life, and equity and ethics. We don't believe you can have absolute peace, but more or less the kind of coexistence Khruschev described in his 1961 speech, at least for the near future. By affluence we mean over $1,000 per/capita, and European standards of living soon afterwards. By national and ethnic identity and freedom, we refer to national or ethnic identity, not necessarily to individual freedom. Many cultures do not really like individualism; they think it a selfish and unworthy concept. On quality of life, we mean middle class and

lower middle class standards worldwide, while adopting as much as possible from the way the upper middle classes and the rich live. And as for equity and ethics, we originally included the concept of justice, but justice is too expensive, so let's say that men should at least be fair, and let's remind people of their obligations and responsibilities as well as their rights and privileges. Justice is a worthwhile ideal, but a very expensive ideal.

 

What do you mean by that?

 

Justice for the Arabs is death for the Israelis. Justice for the Israelis is death, or at least expatriation, for some Arabs. Justice is the most expensive commodity in the world: it means blood. As much justice as you can get is the most noble ideal of mankind.

I believe in justice. Justice plays a very big role in my life, but I am not a fanatic. I'm not a maniac about it, even though I feel very uncomfortable whenever I see an unjust situation. Justice to the American Indian means two hundred million white Americans get wiped out. I think in some ways justice is more important than love. I am not a Christian. In a way I am very Jewish, and in the Jewish religion justice is important, even more important than love, but not more important than human beings.

 

Earlier you said that this situation of rich and poor was a fact of life which is unavoidable.

 

If you wish to make the poor rich rapidly, the most rapid way to make them rich is to increase the gaps. The most efficient method we have ever found of making poor people rich rapidly is having a lot of very rich people around. Now, it happens that the ideology goes the other way. The ideology says it does not happen. Look at South Africa. In South Africa you have got about two million whites and ten million blacks. Those two million whites are trying to keep the ten million blacks poor. They cannot do it. As the whites get rich, something percolates down to the blacks. Wages are going up for the Blacks. Also their training, their education, everything. The whites will continue to try to keep the blacks down, but get rich themselves at the same time, and will find it impossible.

The most obvious thing in the world is that riches percolate down. What do the rich nations or classes do to the poor? They supply capital.

They supply technology. They supply services. They are great big markets. There is nothing about the Chinese culture that made it especially efficient for industrialization until the twentieth century. Every Chinese culture outside mainland China now grows ten percent a year or more. Why? First because modern technology is now available to them to do what they did not do by themselves, that is, invent it; and modern markets are also available to them. So the Japanese grow, the South Koreans grow, the Taiwanese grow, Hong Kong grows, Singapore grows, and so on. Brazil grows like mad today. Why? Because of modern technology and modern customers. The fact that people don't understand this is their problem, not the world's problem.

 

But do you still believe that in this finite planet we will find infinite resources to answer the demands of rising standards of living?

 

I assume there must be limits. I don't know how the limits change over time with improved technology. I wouldn't make the final decision right now. With current and near current technology, we can support fifteen billion people in the world at twenty thousand dollars per capita for a millennium - and that seems to be a very conservative statement. We can do it with an adequate standard of life, adequate quality of life - at least by middle-class standards, but not necessarily by upper-middle class standards. The upper-middle class does have to give up many of its most cherished standards, if the middle class is to live well. For example, it's a suburbanized world. There will be suburbia, everywhere.

Let's think of it this way: In the twentieth century the world urbanized. Up until the eighteenth century for every person in the city there were ten to twenty people outside the city. The world is now suburbanizing in the same way as it previously urbanized. In the twenty-first century, if things go smoothly, the world will probably become suburbanized. That's not that bad. There're a hundred and fifty million square kilometers of land in the world. There are only sixty million square kilometers of more or less level available land. You put ninety million aside for recreation and other useful purposes. That's a lot. Of the sixty million kilometers of usable land, you use twenty million for human settlements and ten million for factories, for commercial, industrial, and service activities - half the land. The other half is for agriculture, entertainment, leisure. But basically it's all being used. The amount of park space may go way up. But wherever you go in the world, you will see suburbia.

 

You are hopeful?

For those who like suburbia, I am hopeful. For those who don't like suburbia, I am talking about a tragedy. The upper-middle class does not like suburbia for the poor. They hate it. Let me be very blunt about this. Say you're upper-middle class in a poor country. You have status. You have prestige. You can buy immunity from the annoyances of life. You can buy a good maid. Joseph Schumpeter made the remark that one good maid is worth a household full of appliances. You have one of thousands of cars, not one of millions. The rich cannot do anything wrong. In other words, many things that the upper-middle class prizes so much disappear when everybody gets rich. The reason why Limits to Growth was eagerly accepted was partly because of the quasi-legitimacy of its concern, but even more because it was presented to a very receptive political and emotional milieu.23456


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