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The school of economics as a suicide academy?

The school of economics as a suicide academy?


“Anyone who thinks that economic growth can continue for ever on a finite planet is either a madman or an economist.” Kenneth Boulding

The Limits to Growth Study of 1972

In 1972 economists became embroiled in a controversy with a group of systems scientists from the Massachusetts Institute of Technology and declared themselves the winners. It became the conventional wisdom that the economists won the argument. This complacent judgement now turns out to be premature.

The systems scientists had been commissioned by a group called the Club of Rome to research the impact of economic growth on the ecological system. Their book, published in 1972, was titled “The Limits to Economic Growth”. It argued that two things would set a constraint on the economic growth process – an accumulation of pollution and wastes and the depletion of resources. The damage from pollution – for example from greenhouse gases – would require the diversion of increasing amounts of resources to mitigate and adapt to increasing difficulties. At the same time depletion – eg of fossil fuels, oil, gas, minerals and biological resources – would mean that harder and costlier to access resources would have to be accessed as time went by and that would raise costs and choke off growth too. (1)

Crucially the LtG authors did not say that the Limits to Growth (LtG) constraints would be immediate – their modelling, done with early computer technology, dated the end of growth, followed by a period of involuntary contraction, in and after the first two decades of the 21st century. Quelle surprise – in recent years mainstream economists have been puzzling over what they call “secular stagnation”.

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