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The Transition from the Neoclassical Growth Model to Ecology

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  • Schlauch, Michael
  • Palmisano, Gaia

Abstract

This paper examines the assumptions and conclusions of the neoclassical growth model put forth by Solow and many others. We investigate the origins of the paradigm of unlimited growth and technological progress and question their plausibility. In contrast, we develop a modified version of the neoclassi- cal growth model where we consider non-human, environmental resources such as energy as an additional input factor and recognize their limited ca- pacity to recover from human impact. Surprisingly, the same mathematical framework of the neoclassical growth model gets to the opposite conclusions - namely that long term growth cannot exceed a level in which nature begins to deplete. Growth further that level as we might experience today leads to natural and economic disaster. Technological progress understood as produc- tivity increase can only delay but not prevent this crisis. We compare these conclusions to the opposite hypothesis of the Environmental Kuznets Curve. Also we show how this model can lead to a greater understanding of present or future observations that are connected to environmental deficiency, such as social divergence and stagnating life satisfaction in developed countries.

Suggested Citation

  • Schlauch, Michael & Palmisano, Gaia, 2013. "The Transition from the Neoclassical Growth Model to Ecology," MPRA Paper 45867, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:45867
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    File URL: https://mpra.ub.uni-muenchen.de/45867/1/MPRA_paper_45867.pdf
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    References listed on IDEAS

    as
    1. Cole, M.A. & Rayner, A.J. & Bates, J.M., 1997. "The environmental Kuznets curve: an empirical analysis," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 401-416, November.
    2. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    3. Roger Perman & David I. Stern, 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 325-347, September.
    4. Mota, Rui Pedro & Dias, João, 2006. "Determinants of CO2 emissions in open economies: testing the environmental Kuznets curve hypothesis (1970-2000)," MPRA Paper 13342, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    growth; degrowth; limits of growth; ecological economics; resource efficiency; solow-swan model; sustainability; ecology; neoclassical growth model; EKC; environmental kuznets curve;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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