Unemployment, Cornucopia and the Identity Crisis of "Green Growth"

"Every labor-saving device creates in general as many, oftentimes more, jobs than it destroys.” Robert Millikan, "Leaders Deny Science Cuts Jobs," New York Times, February 23, 1934.

"...in spite of dire predictions, continued growth has created many more jobs than it has destroyed, holding North American unemployment to levels that can be dealt with fairly easily by public policy." Richard Lipsey, "The End of the World As We Know It?" Literary Review of Canada, October 2009.

"The economy of labour effected by the introduction of new machinery, for the moment, throws labourers out of employment. But such is the increased demand for the cheapened products, that eventually the sphere of employment is greatly widened." William Stanley Jevons, The Coal Question, 1865.

The above statements are all instances of what I will call the "Cornucopia Axiom." The Jevons Paradox, or "rebound effect", is a corollary of that axiom, as Jevons himself stated emphatically in The Coal Question: "Now the same principles apply, with even greater force and distinctness, to the use of such a general agent as coal. It is the very economy of its use which leads to its extensive consumption." The Jevons Paradox and the Cornucopia Axiom are thus inseparable. If one is categorical, so is the other; if either one is contingent, they both are. No cherry picking allowed!

The Jevons Paradox states, "It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the, truth." Is that absolutely true? In my opinion it isn't but my opinion is not what is at stake. What is at stake is the identity between the Cornucopia Axiom and the Jevons Paradox.

Upcoming on February 2nd on the CBC Ideas program is a debate featuring Paul Ekins, Tim Jackson, Richard Lipsey and Peter Victor on the question, "Green Growth or No Growth?" I'm hoping that Jackson and Victor will use my "knockdown argument", which I will now explain. Please excuse the repetition, but experience has shown me that this material evokes acute symptoms of cognitive dissonance and thus needs to be gone over carefully more than once:

In his October 2009 review of Peter Victor's Managing without Growth, Lipsey mangled a familiar platitude about the effects of improved technology on employment, "On employment, in spite of dire predictions, continued growth has created many more jobs than it has destroyed, holding North American unemployment to levels that can be dealt with fairly easily by public policy."

Robert Millikan's often paraphrased formulations of the platitude went, "Science creates more jobs than it destroys" or, more specifically, "Every labor-saving device creates in general as many, oftentimes more, jobs than it destroys.” The basic idea, however, goes back at least to Henry Martyn's remarkable 1701 anti-mercantilist pamphlet, Considerations upon the East India Trade. (Dani Rodrik discussed this pamphlet in his new book, The Globalization Paradox: Democracy and the Future of the World Economy, see especially pages 51-55.)

Now here is the clincher: the Jevons Paradox or "rebound effect" is also based on the exact same principle. Not on a similar or related idea -- the same idea. This can be readily confirmed by reference to chapter six of The Coal Question, "The Economy of Fuel". "It is very commonly urged," wrote Jevons,

that the failing of coal will be met by new modes of using it efficiently and economically. The amount of work got out of coal may be made to increase manifold while the amount of coal consumed is stationary or diminishing. We have thus it is supposed means of completely neutralizing the evils of scarce and costly fuel.

Jevons conceded this may be the case for coal used in the home. "But the economy of coal in manufactories is a different matter. It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth."

Jevons made explicit the connection between his paradox of energy efficiency and the standard one referring to machinery and employment:

As a rule, new modes of economy will lead to an increase of consumption, according to a principle recognised in many parallel instances. The economy of labour effected by. the introduction of new machinery, for the moment, throws labourers out of employment. But such is the increased demand for the cheapened products, that eventually the sphere of employment is greatly widened. Often the very labourers whose labour is saved find their more efficient labour more demanded than before.

But the connection between energy efficiency, increased consumption and job creation is not merely a parallel but a sequence. In discussing the prospects for the Sterling engine, Jevons observed,

But such an improvement of the engine when effected will only accelerate anew the consumption of coal. Every branch of manufacture will receive a fresh impulse -- hand labour will be still further replaced by mechanical labour, and greatly extended works will be undertaken by aid of the cheap air-power, which were not commercially possible by the use of the costly steam-power.

The implications of this sequential relationship are profound. Stated simply, if we are to take one of the most venerable maxims of economics at its face value -- that is as a categorical claim and not a provisional or contingent one -- mechanization will create more jobs than it destroys IF AND ONLY IF improvements in energy efficiency ALSO result in increased consumption of fuel.

Of course advocates of green growth don't accept the categorical version of the Jevons Paradox. Instead, they envision the absolute "decoupling" of economic growth from environmental throughputs and their adverse effects. Recall that the Jevons Paradox involves the projected effect of a relative decoupling (i.e., efficiency). Now supposing such an absolute decoupling is possible, where does that leave job creation? The idea of decoupling leaves employment no less decoupled from the principle that formerly linked it to technology-driven economic growth.

Got it? EITHER job creation from technology-driven growth entails expanded consumption of energy resources OR decoupling energy consumption from economic growth entails decoupling job creation from economic growth. It's either/or not "pick one from each category."