Liebig’s Law of the Minimum, often simply called Liebig’s Law or the Law of the Minimum, is a principle developed in agricultural science by Carl Sprengel (1828) and later popularized by Justus von Liebig. It states that growth is controlled not by the total of resources available, but by the scarcest resource (limiting factor). This concept was originally applied to plant or crop growth, where it was found that increasing the amount of plentiful nutrients did not increase plant growth. Only by increasing the amount of the limiting nutrient (the one most scarce in relation to “need”) was the growth of a plant or crop improved.This principle can be summed up in the aphorism, “The availability of the most abundant nutrient in the soil is as available as the availability of the least abundant nutrient in the soil.”
HSBC has released a fanciful report this week that forecasts a trebling of world economic growth between now and the year 2050. It’s a reminder that most in the global financial community, informed by neo-classical economics or Abundance Economics, do not understand limits to the system.
The work has already been done, however, on limiting factors in natural systems and now that oil is no longer available to fund new economic growth it would behoove the financial community to become familiar with these theories. Leibig’s Law, for example, has the most relevancy today as oil–the high density energy source that built out Western societies over the past century–becomes the limiting factor to growth. Indeed, we see that reflected now in the US economy’s inability to produce enough jobs to meet its own carrying capacity. The US, and the West, have permanently lost access to the cheap energy inputs that would allow their economies to recover.