Social choice and economic growth

Abstract

Optimal economic growth deals with the problem of how societies make tradeoffs between current and future consumption, or equivalently, how societies make decisions about investment rates. Until now, theorists have simply assumed that there is some societal utility function which planners can maximize. Social choice theorists have thrown doubt upon the concept of a societal utility function. We treat optimal economic growth as a problem in social choice theory. Assume that citizens have preferences over the various growth plans. Under what conditions will a majority rule equilibrium exist? We show that such an equilibrium can exist for a Ramsey type problem. We then briefly consider social choice in the so-called "labor surplus" economy. The theory of optimal economic growth deals with the question of how societies make trade offs between generations. Economists working in the field of optimal*growth have conceived the field as consisting of technical rather than political decisions. In this paper we attempt to politicize some models of optimal economic growth. In the next section, we sketch the bare growth model, and then discuss the mathematics of optimum control. We then discuss some ways in which politics may be introduced into the model. In the fourth section we explore one growth model that has been politicized. In the concluding section we offer some speculations about political growth models.