Limits to Growth Concepts in Classical Economics

Abstract

AbstractThe neoclassical models of economics seem to have eluded the concept of physical limits to growth by assuming that the market and the technological advances evoked by it will make it possible to tap new resources and create substitution of production factors. They have also rarely addressed limitations created by the political, psychological, and social institutions in their analyses. Classical economics, on the other hand, appears to have been cognizant of a variety of limitations to growth, including demographic, environmental, and social. Using system dynamics method, I reconstruct growth models described by key classical thinkers and explain their behavior using computer simulation. The paper demonstrates how system dynamics can be used with advantage for constructing models of theoretical concepts in economics and experimenting with them for understanding their behavior. Given the variety of assumptions used by the classical thinkers, a case is made also for adopting a pluralistic perspective in economic analyses.KeywordsEconomic growthEconomic developmentEconomicsClassical economicsSystem dynamicsComputer simulationEnvironmentResourcesLimits to growth