The New Republic | October 7, 2019
Once upon a time, economists believed that there was a limit to economic growth.
Many economists held this belief, including founding fathers such as Adam Smith, David Ricardo and John Stuart Mill. They based this conclusion on, among other things, the fact that there was a limited supply of land. And for hundreds of years, the theory of finite growth prevailed as economists acknowledged the interdependence of natural and economic systems.
That is, until recently.
In the last 75 years, economists have chosen instead to focus on “fairy-tales of eternal economic growth,” as climate activist Greta Thunberg charged. According to Christopher Jones, an Arizona State University assistant professor in the School of Historical, Philosophical and Religious Studies, the reversal began with American economist Robert Solow who revolutionized growth theory with a pair of influential articles written in the mid-20th century. Solow presented a new model of growth that excluded land, inadvertently cutting the natural world out of modern growth theory. The new model instead focused on the contributions of capital, labor and technical progress.
The most prominent challenge to Solow’s model came with the rise of the environmental movement in the late 60s. An MIT team commissioned by the nonprofit organization called the Club of Rome released "The Limits to Growth," which challenged Solow’s articles. He fired back, arguing that “the world can, in effect, get along without natural resources.” Jones, who is also a senior sustainability scientist in the Julie Ann Wrigley Global Institute of Sustainability, says that this is in fact the fatal flaw in his model. Solow, his colleagues and other economists were so focused on inputs that they did not imagine the possibility of outputs, such as waste and pollution, growing to be so consequential that they would impact the ecosystem integrity and thus economic growth.
The belief of infinite economic growth is a fallacy and one that nations have used as an excuse not to address climate change. As Jones says, we need to return to the previous theory of economic growth, which is more suited to our current times and one that dispels the fantasy of infinite growth on a finite planet.