The Failed Growth Economy, Stagnation, and Biophysical Limits to Growth

There are many indications that the era of economic degrowth has already begun, despite conscious policy efforts to maintain it. This indicated by a secular decline in the rate of GDP growth for essentially all OECD countries and many developing ones over the second half of the twentieth century. I believe that this phenomenon has occurred because the mature economies of the world have confronted a set of internal, or social, limits driven by the internal dynamics of capital accumulation and by approaching biophysical limits. These patterns are likely to continue. The purpose of this paper is to synthesize the literature on internal limits to capital accumulation and economic growth with the emerging literature on biophysical limits. Growth-oriented mainstream economics is incapable of analyzing adequately the historical conjuncture of the internal and biophysical limits. A study of heterodox political economy and institutional economics is needed in order to understand the transition to sustainability. The paper surveys prior theories of the internal limits to economic growth and synthesizes them with future potential limits imposed by the decrease in availability and increase in cost of high-quality resources, climate change and peak oil.