Public Awakens to Limits of Growth

[AC_Hacker]

Capitalism is based on the assumption of growth...

no growth = no capitalism

The implications could not be more profound.

40 years after, "The Limits to Growth" is back in the news. Sooner or later, someone had to notice that the economic crisis that we are seeing all around us is something that eerily reminds the "base case" scenario of the old Limits study of 1972. Someone did, eventually. Here is a comment of mine on the event.
- Ugo Bardi

"This year, we have reached the 40th anniversary of the controversial study, "The Limits to Growth," originally conducted in 1972. It was sponsored by the think-tank called the "Club of Rome" and performed by a group of researchers at MIT, led by Dennis Meadows, using the most powerful computers of the time. Using data going back hundreds of years they created a long term model of major global trends taking into account resource depletion, birth and death rates, population growth, pollution, and food per capita (see image)."

(...more HERE)

-AC_Hacker

[roflwaffle]

In the vast majority of definitions of capitalism there's nothing that strictly ties it to growth. Just because an economy shrinks (recession) doesn't make it somehow not capitalistic either. The biggest factor tends to be private ownership of the means of production.

Originally Posted by Wikipedia

Capitalism is generally considered by scholars to be an economic system that includes private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange, and wage labor.

PS world3 is also a pretty bad model given some of the assumptions. Like they say in programming, garbage in, garbage out.

[AC_Hacker]

Originally Posted by roflwaffle

In the vast majority of definitions of capitalism there's nothing that strictly ties it to growth. Just because an economy shrinks (recession) doesn't make it somehow not capitalistic either.

How important do you think credit is to capitalism? I am talking here about capitalism as it is practiced, rather than as it is defined...

How important is growth to the practice of credit remaining viable?

I think it is pretty clear that

no growth = no credit

and...

no credit = no capitalism.

Originally Posted by roflwaffle

world3 is also a pretty bad model given some of the assumptions. Like they say in programming, garbage in, garbage out.

Garbage in garbage out? I see that phrase being used a lot by the weak minded, which I'm sure is not the case with you. Perhaps you could be more specific...

I'd be interested to see how the 'garbage' assumptions you have identified are affecting the accuracy of the predictions.

The computer model was done 40 years ago and now we do have an opportunity to asses it's accuracy.

I'd be interested in your ideas.

-AC

[NeilBlanchard]

Exponential Economist Meets Finite Physicist

[roflwaffle]

Originally Posted by AC_Hacker

How important do you think credit is to capitalism? I am talking here about capitalism as it is practiced, rather than as it is defined...

How important is growth to the practice of credit remaining viable?

I think it is pretty clear that

no growth = no credit

and...

no credit = no capitalism.

We've had no growth in more than a few local recessions and a few global recessions, and people still had credit. People have had credit independent of whether or not the economy is growing, shrinking, or stable. We've had no growth and we still had credit.

Capitalism also doesn't require credit. You can have capitalism with credit, or w/o credit. Most capitalist economies tend to have credit, and so do most socialist economies. Credit is a common feature of most economies because it's useful, but it's not a requirement to have capitalism (or anything else).

Originally Posted by AC_Hacker

Garbage in garbage out? I see that phrase being used a lot by the weak minded, which I'm sure is not the case with you. Perhaps you could be more specific...

I'd be interested to see how the 'garbage' assumptions you have identified are affecting the accuracy of the predictions.

The computer model was done 40 years ago and now we do have an opportunity to asses it's accuracy.

I'd be interested in your ideas.

-AC

The world3 model was great because it was an illustrative exercise in modeling resource consumption versus population, but it sucked because it used some very simplistic assumptions that would lead to all sorts of erroneous conclusions.

One of those was costless substitution. In it they assumed I could turn a lb of potash into a lb of gold or a lb of gasoline at no cost. This leads to every non-renewable resource eventually being funneled into feeding people, which isn't at all possible. There also aren't strictly speaking hard limits to the available resources. They are finite, but who knows how much of what we'll get, ie the guns versus butter curve in economics, except with extraction and processing of something like thousands of non-renewable resources.

The model combines all possible nonrenewable resources into one aggregate variable, nonrenewable_resources. This combines both energy resources and non-energy resources. Examples of nonrenewable energy resources would include oil and coal. Examples of material nonrenewable resources would include aluminum and zinc. This assumption allows costless substitution between any nonrenewable resource. The model ignores differences between discovered resources and undiscovered resources.

There are other serious problems too. For instance there isn't any modeling of recycling. Stuff is used up in one run. There are issues with economic productivity. IRL, if the price of steel doubles, and we make cars half the size of what they were, ala the 70s, productivity stays the same because a car is a car independent of how much material we put into it. The world3 model doesn't take this into account.

It was a good model insofar as it illustrated in a simple way what could happen, but it wasn't meant to be predictive. It's assumptions are too crude.