University of New Hampshire University of New Hampshire Scholars' Repository Doctoral Dissertations Student Scholarship Winter 2008 The fallacy of endless growth: Exposing capitalism's insustainability William S. Strauss University of New Hampshire, Durham Follow this and additional works at: https://scholars.unh.edu/dissertation Recommended Citation Strauss, William S., "The fallacy of endless growth: Exposing capitalism's insustainability" (2008). Doctoral Dissertations. 463. https://scholars.unh.edu/dissertation/463 This Dissertation is brought to you for free and open access by the Student Scholarship at University of New Hampshire Scholars' Repository. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of University of New Hampshire Scholars' Repository. For more information, please contact [email protected]. THE FALLACY OF ENDLESS GROWTH EXPOSING CAPITALISM’S INSUSTAINABILITY BY WILLIAM S. STRAUSS BS, BUSINESS ADMINISTRATION, UNIVERSITY OF NEW HAMPSHIRE, 1992 MBA, UNIVERSITY OF NEW HAMPSHIRE, 1994 DISSERTATION Submitted to the University of New Hampshire in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in Earth and Environmental Sciences and Economics December, 2008 i UMI Number: 3348319 INFORMATION TO USERS The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleed-through, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. ______________________________________________________________ UMI Microform 3348319 Copyright 2009 by ProQuest LLC All rights reserved. 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Box 1346 Ann Arbor, MI 48106-1346 ii iii TABLE OF CONTENTS TABLE OF CONTENTS .................................................................................................................. iv LIST OF FIGURES .......................................................................................................................... vi ABSTRACT ..................................................................................................................................... xi INTRODUCTION ............................................................................................................................ 1 A Vision of a Zero-growth World ............................................................................................... 1 The End of Economic Growth ................................................................................................ 3 A More Rigorous Discussion of the Topics of this Project ................................................. 6 What is the Value of this Research? ..................................................................................... 9 The Search for Ideas and Tests of Truth............................................................................ 13 Summary of Chapter One: Economic Growth and the Rise of Capitalism .................... 15 Summary of Chapter Two: The Ubiquitous (and Dangerous!) Growth Assumption Lurking in the Shadows ......................................................................................................... 16 Summary of Chapter Three: Complex Dynamics, Complex Systems: Where are We Going? ...................................................................................................................................... 18 Conclusion to the Introduction............................................................................................ 20 CHAPTER ONE ............................................................................................................................ 22 ECONOMIC GROWTH AND THE RISE OF CAPITALISM ............................................................. 22 Part One: From Subsistence to Plenty ............................................................................... 22 A Story of Demographic Transition ................................................................................. 29 A Discussion of the Transition from the Malthusian Era into the Current Regime .. 35 Natural Selection, Environmental Pressures, and Lifestyle Preferences .............. 36 The Trade-off between Current Generation and Future Generation Consumption ......................................................................................................................................... 37 Natural Selection and Productivity Growth............................................................... 46 Part Two: Natural Selection and the Transition to Sustained Economic Growth ....... 51 The Decisions Facing each Generation .......................................................................... 51 The Optimization of Intertemporal Utility .................................................................... 55 A Dynamic Story of Evolution .......................................................................................... 60 iv The Effects of Trade on the Process of Transition from the Malthusian Regime .... 70 Conclusion to Part Two .................................................................................................... 71 Part Three: The Hurdle: Getting Past the Distributional Problems of the Current Economic Regime .................................................................................................................. 72 The Foundation for an Unequal Society ......................................................................... 79 A Basic Model of Inequality and Revolution .................................................................. 83 Autocracy and Democracy ............................................................................................... 94 Trade and the Patterns of Growth ............................................................................... 102 Conclusion ............................................................................................................................ 108 CHAPTER TWO ......................................................................................................................... 110 MODERN GROWTH THEORY: A CLOSE LOOK AT THE THE DETAILS AND THE LONG-RUN PREDICTIONS – CLASSIC VIEWS EXPLORED AND MODIFIED WITH NON-TRADITIONAL TWISTS ...................................................................................................................................... 110 Introduction ......................................................................................................................... 110 A Closer Look at Accumulation, Production, and Innovation ....................................... 115 The Solow-Swan Model and Extensions ............................................................................ 119 Solow-Swan and a Thermodynamic View of Economic Activity ................................... 131 Growth with Consumer Optimization – Ramsey and Beyond ........................................ 155 Current Endogenous Growth Models: Knowledge, Education, Diffusion, Innovation, and the Proliferation of Goods .......................................................................................... 194 Uzawa-Lucas-Rebelo: Human Capital in Production .................................................. 196 Endogenous Growth through Innovation and Diffusion .............................................. 204 Conclusion ............................................................................................................................ 218 CHAPTER THREE ...................................................................................................................... 220 WHERE WE HAVE BEEN, HOW WE GOT HERE, AND WHERE WE MIGHT GO ..................... 220 Introduction ......................................................................................................................... 221 The Background for the Model .......................................................................................... 223 The Model’s Underpinning ................................................................................................. 230 The Simulation Model ......................................................................................................... 234 Capital ............................................................................................................................... 236 Labor ................................................................................................................................. 237 Energy Services ................................................................................................................ 239 The Production Function ................................................................................................ 247 v Simulating the Future ......................................................................................................... 249 Inequality and Social Unrest .......................................................................................... 263 Finding a Path to a Stable Future ....................................................................................