Category Archives: Julian Simon

Having touched on population growth in the last entry, it’s time for a quick look at how economic growth has become a serious threat to the global ecosystem. This is a large topic which has filled a good number of books. But on its most basic level its logic is simple. The key point is that neoclassical economics, the dominant economic model for much of recent history, is based in large part on an assumption that the economy, as a whole, can and should continue growing forever. A major part of such growth is its physical dimension, which is well reflected in increasing “throughput,” defined by Herman Daly as “the flow beginning with raw material inputs, followed by their conversion into commodities, and finally into waste products.” (p. 28 ) The neoclassical view promotes unending physical growth and throughput

The problem with forever

When confronted with the prospect of depleted natural resources as a result of ongoing growth, the neoclassical economist’s answer is that human capital in the form of technical innovation will always make up for lost natural capital (natural resources), or even that we will always find new ways to extract ever more resources. (An article by the late economist, Julian Simon, provides a particularly striking example of this thinking.) The flaw in this model is self evident. It fails to acknowledge that the earth and its resources, as well as its absorptive and regenerative capacities, are finite. Indeed, it contrasts sharply with the newer “ecological economics” model which starts from the assumption that the economy is a part of the finite ecosystem and so should strive to respect its limits, lest it damage it. (more…)