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Tuesday 22 Aug 2017 | 15:58 | SYDNEY
Tuesday 22 Aug 2017 | 15:58 | SYDNEY

How severe are the limits to growth?

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23 January 2012 15:38

Recently, New Scientist magazine ran an article (subscription required) marking forty years since the publication of The Limits to Growth. The piece both echoes and cites earlier positive re-appraisals of Limits, including this one by the CSIRO's Graham Turner, and shares a similar pessimistic tone.

Many (most?) economists have tended to have a fairly problematic relationship with this kind of thing, particularly when it comes to the supply of so-called non-renewable resources. When we start off as little, baby economists, we are frequently introduced to the Reverend Thomas Robert Malthus as a cautionary tale about resource pessimism. 

In 1798, Malthus published An Essay on the Principle of Population. Famously, he wrote about the inability of agricultural productivity to keep pace with population growth. Equally famously, he got his forecast wrong. As many subsequent critics have pointed out, Malthus turned out to be writing at a time just before a series of major developments. The acceleration of the Industrial Revolution, a dramatic expansion of international trade, the emergence of new agricultural producers in North America, Argentina and Australia, and the onset of the demographic transition allowed a series of countries, led by his own, to break free from the trap Malthus had just identified. 

Similarly, when Malthusian-style fears about binding constraints to growth reappeared in the late 1960s and early 70s as the world economy experienced a period of rising food prices, the Green Revolution and rising world agricultural productivity ended up allowing food output to run comfortably ahead of population growth, setting food prices off on a decades-long fall in real (inflation-adjusted) terms.

Economists often cite both Malthus' original predictions and the failure of the pessimistic forecasts of the early 1970s like The Limits to Growth as cautionary lessons about what happens when forecasters fail to account properly for the impact of technological change and the power of the price mechanism.

Part of what's going on here is that the economists and those who take a more pessimistic view typically think about resource scarcity in quite different ways. More on that in a follow-up post.

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