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There is a theory in economics that while resources may be limited, through substitution economic growth is limitless. If growth in an economy is limitless, th

There is a theory in economics that while resources may be limited, through substitution economic growth is limitless. If growth in an economy is limitless, the economic value of a company is potentially infinite. http://freakonomics.com/2014/01/24/can-economic-growth-continue-forever-of-course/ http://freakonomics.com/2014/01/24/can-economic-growth-conti... I'm not saying this is right or wrong, just trying to explain the thought.

dredmorbius 10y ago
It's wrong. The concept of infinite substitutability was presented as a "principle" in a 1976 paper, itself trying to argue out of the all too obvious implications of Limits to Growth (1972). "The Age of Substitutability", H. E. Goeller and Alvin M. Weinberg, The American Economic Rrview, Vol. 68, No. 6 (Dec., 1978), pp 1-11 https://www.jstor.org/stable/2951003?seq=1 https://www.jstor.org/stable/2951003?seq=1 Somehow this hypothesis has been raised to the level of a scientific law of economics, trumping thermodynamics, physics, chemistry, and 216 years of actual experience of the Industrial Revolution and subsequent industrial periods, as well as economics' own law of diminishing returns. There's nothing here but wishful thinking. https://books.google.com/ngrams/graph?content=infinite+substitutability&year_start=1800&year_end=2000&corpus=15&smoothing=3&share=&direct_url=t1%3B%2Cinfinite%20substitutability%3B%2Cc0 https://books.google.com/ngrams/graph?content=infinite+subst...
- erispoe 10y ago
  Yey, I wasn't talking about "infinite substitutability" here. Although it's part of the equation. I'm talking about productivity. How you can derive way more value now from the same quantity of resources than you could 2 centuries ago. So yes, there is a ceiling in available resources (although there's a whole lot of resources that we can tap in the solar system alone), but as long as you don't see a ceiling in productivity improvement, you don't see a limit to growth.
  - dredmorbius 10y ago
    You may not think you are, but you are. For productivity, virtually all of the Solow residual disappears if you add energy as a factor. R. U. Ayres and Charles A. S. Hall are two (and independent) authors among many who've demonstrated this. Ping back if you'd like me to dig for specific references. Orthodox economics of course ignores this.

dredmorbius 10y ago

It's wrong. The concept of infinite substitutability was presented as a "principle" in a 1976 paper, itself trying to argue out of the all too obvious implications of Limits to Growth (1972). "The Age of Substitutability", H. E. Goeller and Alvin M. Weinberg, The American Economic Rrview, Vol. 68, No. 6 (Dec., 1978), pp 1-11 https://www.jstor.org/stable/2951003?seq=1 https://www.jstor.org/stable/2951003?seq=1 Somehow this hypothesis has been raised to the level of a scientific law of economics, trumping thermodynamics, physics, chemistry, and 216 years of actual experience of the Industrial Revolution and subsequent industrial periods, as well as economics' own law of diminishing returns. There's nothing here but wishful thinking. https://books.google.com/ngrams/graph?content=infinite+substitutability&year_start=1800&year_end=2000&corpus=15&smoothing=3&share=&direct_url=t1%3B%2Cinfinite%20substitutability%3B%2Cc0 https://books.google.com/ngrams/graph?content=infinite+subst...

erispoe 10y ago
Yey, I wasn't talking about "infinite substitutability" here. Although it's part of the equation. I'm talking about productivity. How you can derive way more value now from the same quantity of resources than you could 2 centuries ago. So yes, there is a ceiling in available resources (although there's a whole lot of resources that we can tap in the solar system alone), but as long as you don't see a ceiling in productivity improvement, you don't see a limit to growth.
- dredmorbius 10y ago
  You may not think you are, but you are. For productivity, virtually all of the Solow residual disappears if you add energy as a factor. R. U. Ayres and Charles A. S. Hall are two (and independent) authors among many who've demonstrated this. Ping back if you'd like me to dig for specific references. Orthodox economics of course ignores this.