Three More Growth Fallacies. By Herman Daly In a previous essay I identified eight fallacies about growth. Well, at the risk of starting a growth industry, here are three more. 1. As natural resources become scarce we can substitute capital for resources and continue to grow. Growth economists assume a high degree of substitutability between factors of production. But if one considers a realistic analytic description of production, as given in Georgescu-Roegen’s fund-flow model, one sees that factors are of two qualitatively different kinds: (1) resource flows that are physically transformed into flows of product and waste and (2) capital and labor funds, the agents or instruments of transformation that are not themselves physically embodied in the product. This fundamental change in the pattern of scarcity has not been incorporated into the thinking of growth economists. 2.
Space tourism: a silly reason to believe in infinite economic growth. Of course many technical space accomplishments are real and impressive. Eight Fallacies about Growth. By Herman Daly One thing the Democrats and Republicans will agree on in the current U.S. presidential campaign is that economic growth is our number one goal and is the basic solution to all problems. The idea that growth could conceivably cost more than it is worth at the margin, and therefore become uneconomic in the literal sense, will not be considered. But, aside from political denial, why do people (frequently economists) not understand that continuous growth of the economy (measured by either real GDP or resource throughput) could in theory, and probably has in fact, become uneconomic? What is it that confuses them? Here are eight likely reasons for confusion. 1.
However, this confuses aggregate growth with reallocation. Reallocation of production away from more resource-intensive goods to less resource-intensive goods (“decoupling”) is possible to some degree and often advocated, but is limited by two basic facts. 2. 3. 4. 5. 6. 7. 8. Wp-content/uploads/2009/12/Daly_SciAmerican_FullWorldEconomics.pdf. CASSE (steadystateecon) sur Twitter. What Is the Limiting Factor? By Herman Daly In yesteryear’s empty world capital was the limiting factor in economic growth. But we now live in a full world. Consider: What limits the annual fish catch — fishing boats (capital) or remaining fish in the sea (natural resources)?
Clearly the latter. What limits barrels of crude oil extracted — drilling rigs and pumps (capital), or remaining accessible deposits of petroleum — or capacity of the atmosphere to absorb the CO2 from burning petroleum (both natural resources)? Economic logic says to invest in and economize on the limiting factor. What has kept economists from recognizing Soddy’s insight? Economists used to believe that capital was the limiting factor.
William Nordhaus and James Tobin were quite explicit (“Is Growth Obsolete? The prevailing standard model of growth assumes that there are no limits on the feasibility of expanding the supplies of nonhuman agents of production. The claim that capital is a near perfect substitute for natural resources is absurd. "Le vrai risque pour l'avenir : la surconsommation" LE MONDE | • Mis à jour le | Par Frédéric Julien, doctorant en science politique (université d'Ottawa) et chercheur invité au département de géographie du King's College London Faut-il cette année convier le monstre de la surpopulation à la fête d'Halloween ? La question se pose alors que les Nations unies ont annoncé qu'au 31 octobre le genre humain franchirait la barre des 7 milliards de représentants.
Il y a bien là un potentiel de frayeur : peut-être les Terriens deviennent-ils trop nombreux pour leur planète, certes accueillante, mais aux ressources limitées. Peut-être. Ultimement, l'impact environnemental de l'être humain dépend du niveau de sa consommation de ressources naturelles et de sa production de déchets. Voilà donc les deux grands leviers avec lesquels jouer si l'on souhaite limiter la dégradation de l'écosystème planétaire. Or c'est à un mode de vie de ce genre qu'aspire la majeure partie du reste du monde. Assurément. Mais ce n'est qu'un début. Ecosystem and Economy. The Social Contract - Uneconomic Growth In a Full World. By Herman Daly Volume 13, Number 3 (Spring 2003) Issue theme: "Ecological economics: highlighting the work of Herman Daly" "That which seems to be wealth may in verity be only the gilded index of far-reaching ruin...
" -- John Ruskin, Unto this Last, 1862. Growth in GNP is so favored by economists that they call it "economic" growth, thus ruling out by terminological baptism the very possibility of "uneconomic" growth in GNP. But can growth in GNP in fact be uneconomic? Before answering this macroeconomic question let us consider the analogous question in microeconomics -- can growth in a microeconomic activity (firm production or household consumption) be uneconomic?
Of course it can. But when we move to macroeconomics we no longer hear anything about optimal scale, nor about marginal costs and benefits, nor is there anything like a "when to stop rule. " There is no a priori reason why at the margin the costs of growth in GNP could not be greater than the benefits. Neoclassical Paradigm. Sef.umd.edu/files/ScientificAmerican_Daly_05.pdf.