A physical theory of economic growth
Economic growth is unpredictable unless demand is quantified. We solve this problem by introducing the demand for unpaid spare time and a user quantity named human capacity. It organizes and amplifies spare time required for enjoying affluence like physical capital, the technical infrastructure for production, organizes and amplifies working time for supply. The sum of annual spare and working time is fixed by the universal flow of time. This yields the first macroeconomic equilibrium condition. Both storable quantities form stabilizing feedback loops. They are driven with the general and technical knowledge embodied with parts of the supply by education and construction. Linear amplification yields S-functions as only analytic solutions. Destructible physical capital controls medium-term recoveries from disaster. Indestructible human capacity controls the collective long-term industrial evolution. It is immune even to world wars and runs from 1800 to date parallel to the unisex life expectancy in the pioneering nations. This is the first quantitative information on long-term demand. The theory is self-consistent. It reproduces all peaceful data from 1800 to date without adjustable parameter. It has full forecasting power since the decisive parameters are constants of the human species. They predict an asymptotic maximum for the economic level per capita. Long-term economic growth appears as a part of natural science.
References listed on IDEAS
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- Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
- Danielmeyer, H.G. & Martinetz, Thomas, 2010. "The Biologic Stability of the Industrial Evolution," European Review, Cambridge University Press, vol. 18(02), pages 263-268, May.
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