Modes of Growth in Economic Systems

Posted: 22 Jun 2012

See all articles by T. Garrett

T. Garrett

affiliation not provided to SSRN

Date Written: May 20, 2012

Abstract

In general, and economic systems should be no exception, growth is a dynamic response to a local convergence of flows. Much like a growing child who eats food, economic growth is possible only when the economy is able to consume energy from its reserves faster than it dissipates energy by doing work. But there are constraints here. Like a growing child, one is a "law of diminishing returns": current growth becomes increasing diluted in past growth, so economic growth has a natural propensity to slow with time. However, this law can be overcome to produce innovation and explosive growth, but only provided that new energy reserves are discovered at a sufficiently rapid rate. Indeed, episodes of discovery and innovation have been seen episodically at several times in the past two hundred years. But net discovery is hard to sustain because growth leads to ever faster consumption and depletion of reserves. Globally, we currently appear to be entering a phase of net reserve depletion. If this continues, it can theoretically be expected to lead to declining innovation and ultimate civilization collapse.

Suggested Citation

Garrett, T., Modes of Growth in Economic Systems (May 20, 2012). Available at SSRN: https://ssrn.com/abstract=2089086

T. Garrett (Contact Author)

affiliation not provided to SSRN ( email )

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